<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 7, 1996
REGISTRATION NO. 333-
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
TRAVIS BOATS & MOTORS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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TEXAS 5551 74-2024798
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NUMBER)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
MARK T. WALTON
13045 RESEARCH BLVD. CHAIRMAN OF THE BOARD AND PRESIDENT
AUSTIN, TEXAS 78750 13045 RESEARCH BLVD.
(512) 250-8103 AUSTIN, TEXAS 78750
FAX: (512) 250-8104 (512) 250-8103
(ADDRESS, INCLUDING ZIP CODE, AND FAX: (512) 250-8104
TELEPHONE NUMBER, INCLUDING AREA CODE, (NAME, ADDRESS, INCLUDING ZIP CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE AND TELEPHONE NUMBER, INCLUDING AREA
OFFICES) CODE, OF AGENT FOR SERVICE)
PLEASE ADDRESS COPIES OF ALL COMMUNICATIONS TO:
J. ROWLAND COOK, ESQ. CARMELO M. GORDIAN, ESQ.
MARK E. MOURITSEN, ESQ. S. MICHAEL DUNN, ESQ.
JENKENS & GILCHRIST, A PROFESSIONAL BROBECK, PHLEGER & HARRISON LLP
CORPORATION 301 CONGRESS AVENUE, SUITE 1200
600 CONGRESS AVENUE, SUITE 2200 AUSTIN, TEXAS 78701
AUSTIN, TEXAS 78701 (512) 477-5495
(512) 499-3821 FAX: (512) 477-5813
FAX: (512) 404-3520
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
possible after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES TO BE AGGREGATE OFFERING AMOUNT OF
REGISTERED PRICE(1) REGISTRATION FEE
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<S> <C> <C>
Common Stock, par value $.01 per share... $26,162,500 $9,022
</TABLE>
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(1) Estimated pursuant to Rule 457(o) under the Securities Act of 1933, as
amended, solely for purposes of calculating the registration fee.
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL HAVE BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
TRAVIS BOATS AND MOTORS, INC.
CROSS-REFERENCE SHEET
PURSUANT TO REGULATION S-K ITEM 501
<TABLE>
<CAPTION>
ITEM NUMBER AND CAPTION OF
FORM S-1 LOCATION/CAPTION IN PROSPECTUS
-------------------------- ------------------------------
<C> <S> <C>
1. Forepart of the
Registration Statement and Cover Page of Registration Statement; Cross-
Outside Front Cover Page Reference Sheet; Outside Front Cover Page of
of Prospectus............. Prospectus
2. Inside Front and Outside
Back Cover Pages of Inside Front and Outside Back Cover Pages of
Prospectus................ Prospectus
3. Summary Information, Risk
Factors and Ratio of Prospectus Summary; Risk Factors
Earnings to Fixed
Charges...................
4. Use of Proceeds........... Prospectus Summary; Use of Proceeds
5. Determination of Offering Outside Front Cover Page of Prospectus;
Price..................... Underwriting
6. Dilution.................. Prospectus Summary; Risk Factors; Dilution
7. Selling Security Holders.. Principal and Selling Stockholders
8. Plan of Distribution...... Outside Front Cover Page of Prospectus;
Underwriting
9. Description of Securities Outside Front Cover Page of Prospectus;
to be Registered.......... Dividend Policy; Description of Capital
Stock; Shares Eligible for Future Sale
10. Interests of Named Experts Not Applicable
and Counsel...............
11. Information with Respect Outside Front Cover Page of Prospectus;
to the Registrant......... Prospectus Summary; Risk Factors; Dividend
Policy; Capitalization; Selected Consolidated
Financial Data; Management's Discussion and
Analysis of Financial Condition and Results
of Operations; Business; Management; Certain
Transactions; Principal and Selling
Stockholders; Description of Capital Stock;
Shares Eligible for Future Sale;
Underwriting; Consolidated Financial
Statements
12. Disclosure of Commission
Position on Not Applicable
Indemnification for
Securities Act
Liabilities...............
</TABLE>
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED MAY 7, 1996
[LOGO]
1,750,000 SHARES
COMMON STOCK
Of the 1,750,000 shares of Common Stock offered hereby, 1,312,500 shares are
being sold by Travis Boats & Motors, Inc. (the "Company" or "Travis Boats"),
and 437,500 shares are being sold by the Selling Stockholders. See "Principal
and Selling Stockholders." The Company will not receive any of the proceeds
from the sale of the shares being sold by the Selling Stockholders. Prior to
this offering, there has been no public market for the Common Stock of the
Company. Application has been made to approve the Common Stock for quotation on
the Nasdaq National Market under the symbol "TRVS." It is currently estimated
that the initial public offering price will be between $11.00 and $13.00 per
share. See "Underwriting" for information relating to the method of determining
the initial public offering price.
-----------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 7.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND PROCEEDS TO SELLING
PUBLIC COMMISSIONS COMPANY(1) STOCKHOLDERS
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<S> <C> <C> <C> <C>
Per Share...................... $ $ $ $
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Total(2)....................... $ $ $ $
</TABLE>
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(1) Before deducting expenses of this offering payable by the Company,
estimated at $ .
(2) The Company has granted the Underwriters a 30-day option to purchase up to
an additional 262,500 shares of Common Stock solely to cover over-
allotments, if any. If such option is exercised in full, the total Price to
Public, Underwriting Discounts and Commissions and Proceeds to Company will
be $ , $ and $ , respectively. See "Underwriting."
-----------
The Common Stock is offered by the Underwriters as stated herein, subject to
receipt and acceptance by them and subject to their right to reject any order
in whole or in part. It is expected that delivery of such shares will be made
through the offices of Robertson, Stephens & Company LLC ("Robertson, Stephens
& Company"), San Francisco, California, on or about , 1996.
ROBERTSON, STEPHENS & COMPANY PRINCIPAL FINANCIAL SECURITIES, INC.
The date of this Prospectus is , 1996.
<PAGE>
PICTURES ARE INCLUDED AS FOLLOWS:
1. Store front.
2. Interior store wide-angle shot.
3. Feature picture of Travis Edition boat packages.
4. Feature picture of representative parts and accessories area.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OF THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET.
2
<PAGE>
NO DEALER, SALES REPRESENTATIVE OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS
OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, ANY SELLING STOCKHOLDER OR ANY UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER
TO BUY, ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT
RELATES OR AN OFFER TO, OR SOLICITATION OF, ANY PERSON IN ANY JURISDICTION
WHERE SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
UNTIL , 1996 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE COMMON STOCK OFFERED HEREBY, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO
DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR
UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary....................................................... 4
Risk Factors............................................................. 7
Use of Proceeds.......................................................... 13
Dividend Policy.......................................................... 13
Capitalization........................................................... 14
Dilution................................................................. 15
Selected Consolidated Financial Data..................................... 16
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 17
Business................................................................. 24
Management............................................................... 32
Certain Transactions..................................................... 38
Principal and Selling Stockholders....................................... 40
Description of Capital Stock............................................. 41
Shares Eligible for Future Sale.......................................... 44
Underwriting............................................................. 46
Legal Matters............................................................ 48
Experts.................................................................. 48
Additional Information................................................... 48
Index to Financial Statements............................................ F-1
</TABLE>
----------------
The Company intends to furnish its stockholders with annual reports
containing audited consolidated financial statements and an opinion thereon
expressed by its independent auditors, and with quarterly reports for the
first three quarters of each fiscal year containing unaudited summary
financial information.
Unless the context requires otherwise, as used in this Prospectus, "Company"
and "Travis Boats" refer to Travis Boats & Motors, Inc. and its subsidiaries.
The Company's principal executive office is located at 13045 Research
Boulevard, Austin, Texas 78750, and its telephone number is (512) 250-8103.
The trademarks "Travis Boating Center(TM)" and "Travis Edition(TM)" are
owned by the Company. All rights are fully reserved. This Prospectus also
includes trademarks and trade names of companies other than Travis Boats.
3
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information, including "Risk Factors" and Consolidated Financial Statements and
Notes thereto, appearing elsewhere in this Prospectus. Effective September 30,
1995, the Company changed its fiscal year end to September 30; references to
the Company's fiscal years prior to such date refer to the Company's fiscal
years ended on December 31.
THE COMPANY
Travis Boats is a leading multi-state superstore retailer of recreational
boats, motors, trailers and related marine accessories in the southern United
States. The Company currently operates 12 superstores in Texas, Arkansas and
Louisiana under the name Travis Boating Center. Founded in 1979 in Austin,
Texas, Travis Boats differentiates itself from competitors by providing
customers a unique superstore shopping experience that showcases a broad
selection of high quality boats, motors, trailers and marine products at firm,
clearly posted low prices. Each superstore offers complete customer service and
support, including in-house financing programs and full-service repair
facilities staffed by factory-trained mechanics.
The Company sells approximately 40 different models of brand-name fishing,
water-skiing and general recreational boats, along with motors, trailers,
accessories and related equipment. Personal watercraft, off-shore fishing boats
and cabin cruisers are also offered for sale at selected store locations. Boats
sold generally range in size from 16 to 23 feet at prices ranging from $7,500
to $23,000 with an average boat purchase price of approximately $12,000. The
Company custom designs and pre-packages combinations of popular brand-name
boats, such as Aquasport, Cajun and Larson, with Johnson outboard and other
motors, trailers and numerous accessories, under its proprietary Travis Edition
product line. These signature Travis Edition packages, which account for the
vast majority of the Company's total new boat sales, are developed in
coordination with the manufacturers and often include distinguishing features
and accessories that have historically been unavailable to, or listed as
optional by, many competitors. These factors enable the Company to provide the
customer with an exceptional product that is conveniently packaged for
immediate enjoyment and competitively priced.
Travis Boats is the largest volume buyer in the United States of Johnson
outboard motors from Outboard Marine Corporation and is the largest domestic
volume buyer of boats from substantially all of the boat manufacturers it
represents. The Company's volume purchasing, design expertise and market
knowledge has allowed it to position its own Travis Edition line of brand label
recreational boats as a superior value. Unlike most recreational boat dealers,
the Company establishes firm, clearly posted prices on Travis Edition packages,
generally maintains such prices for an entire season and typically does not
engage in promotional discounts or sales. This selling philosophy eliminates
customer anxiety associated with bargaining or negotiation and results in
prices at or below those generally available from competitors. The Company
believes this pricing strategy and low-pressure sales style provide the
customer with the comfort and confidence of having received a better boat with
more features at a lower price. In the Company's view, this approach has
promoted good customer relationships and has enhanced the Company's reputation
in the industry as a provider of quality and value.
Travis Boating Center superstores have a distinctive and stylish trade dress
accented with deep blue awnings, nautical neon building decoration and
expansive glass storefronts. Stores range in size from 6,000 to 33,200 square
feet and average approximately 21,000 square feet. Each superstore presents
customers with a broad array of boats and over 9,000 parts and accessories in a
brightly lit, well-stocked, air-conditioned shopping environment. All boats are
typically displayed fully rigged with motor, trailer and a complete accessory
package, giving a "ready to take home" impression. A professional service and
repair staff operates service bays, providing customers with quality
maintenance and repair service. The Company also participates in offsite sales
promotions such as regional boat shows, in-the-water sales events on area lakes
and various types of
4
<PAGE>
parking lot shows in conjunction with large retailers, including Sam's Clubs.
These and other offsite shows generate significant sales, marketing exposure
and access to a larger and more diverse customer base for nominal incremental
cost.
The recreational boating industry generated approximately $7.7 billion in
retail sales of boats, motors, trailers and related accessories in 1995, of
which approximately $3.0 billion was generated in the Company's 17-state target
market. The boat retailing business is highly fragmented and is characterized
by numerous independent retailers, most of which are family owned, operate in
only a single market, have annual sales of less than $3.0 million and provide
varying degrees of merchandising, professional management and customer service.
The Company believes it has better pricing, superior merchandising, broader
selection, more sophisticated operating systems and a more consumer-oriented
environment than the other independent retailers with which it competes.
Management believes it is the first to have developed a multi-state, chain
superstore merchandising strategy in the retail sales of recreational boats.
The Company's objective is to become the dominant retailer of boats, motors,
trailers and related marine accessories in the southern United States. The
Company's business strategy is to expand its superstore concept, further
develop Travis Edition as an identifiable brand in the recreational boating
business and build customer awareness through extensive advertising and
promotions. This strategy includes expansion into new regional markets,
allowing the Company to benefit from geographic diversity and broaden its
customer base.
Travis Boats' growth strategy is to continue increasing sales at existing
stores and to expand the current store base by further developing existing
markets and entering new markets. Management's strategy for developing new
Travis Boating Center locations has three components: (i) acquire existing boat
retailers, (ii) acquire and convert compatible facilities and (iii) build new
stores. Since 1991, the Company has opened or acquired seven stores in new
markets, while increasing average sales per store from $2.7 million to $4.9
million. The Company's 20,000 square foot new store prototype costs
approximately $825,000 (excluding the cost of the land), is expected to
generate $5.0 million in annual revenues and approximately $250,000 in annual
operating contributions to the Company, resulting in a return on invested
capital of approximately 30%. New locations established through acquisition
typically involve a lower cash investment, yet generate similar sales and
operating contributions. Accordingly, acquisitions have historically produced
substantially greater returns on invested capital than with new store
construction. The Company's expansion strategy is based primarily on
acquisitions rather than new store construction, although it will build new
stores if judged to be the most efficient means of entering a market. Because
of the fragmented nature of the industry, the Company has numerous
opportunities to acquire existing facilities and businesses and believes it can
continue to make such acquisitions on favorable financial terms.
THE OFFERING
<TABLE>
<S> <C>
Common Stock Offered by the
Company.......................... 1,312,500 shares
Common Stock Offered by the
Selling Stockholders............. 437,500 shares
Common Stock Outstanding after the
Offering......................... 3,996,006 shares(1)
Use of Proceeds................... Repayment of $14.2 million of principal and
interest on certain indebtedness including
revolving lines of credit.
Proposed Nasdaq National Market
symbol........................... TRVS
</TABLE>
- --------
(1) Excludes (i) an aggregate of 133,867 shares of Common Stock issuable upon
the exercise of outstanding non-statutory stock options at an exercise
price of $5.25 per share and (ii) 200,000 shares of Common Stock reserved
for issuance under the Company's 1995 Incentive Plan (the "Incentive Stock
Plan"). See "Management--Stock Option Plans and Agreements" and
"Underwriting."
5
<PAGE>
SUMMARY HISTORICAL CONSOLIDATED FINANCIAL AND STORE DATA
(In thousands, except per share and certain store data)
<TABLE>
<CAPTION>
TWELVE
FISCAL YEAR ENDED DECEMBER FISCAL YEAR MONTHS SIX MONTHS
31,(1) ENDED ENDED ENDED MARCH 31,(3)
---------------------------------- SEPTEMBER 30, DECEMBER --------------------
1991 1992 1993 1994 1995(1) 31, 1995(2) 1995 1996
------- ------- ------- ------- ------------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT
OF OPERATIONS DATA:
Net sales............. $13,796 $18,317 $25,757 $37,225 $41,442 $45,006 $16,627 $22,017
Gross profit.......... 3,241 4,193 5,946 8,734 10,306 11,254 3,774 5,572
Operating income...... 698 767 1,270 2,135 3,736 3,007 420 1,007
Net income............ 202 255 596 1,023 2,050 1,408 98 243
Net income per share.. $ 0.08 $ 0.10 $ 0.23 $ 0.39 $ 0.76 $ 0.53 $ 0.04 $ 0.09
Weighted avg. shares
outstanding.......... 2,612 2,612 2,612 2,648 2,684 2,684 2,684 2,684
STORE DATA:
Stores open at period
end.................. 6 7 7 8 11 12 9 12
Average sales per
store(4)............. $ 2,747 $ 3,025 $ 3,679 $ 4,653 $ 4,886 $ 4,946 $ 1,981 $ 2,046
Percentage increase in
comparable store
sales(5)............. 4.7% 7.4% 25.6% 28.4% 5.0% 16.0% 22.6% 6.4%
</TABLE>
MARCH 31, 1996
---------------------
ACTUAL AS ADJUSTED(6)
------ --------------
CONSOLIDATED BALANCE SHEET DATA:
<TABLE>
<S> <C> <C>
Working capital.............................................. $ 2,616 $15,816
Total assets................................................. 41,898 41,898
Short-term debt, including current maturities of long-term
debt........................................................ 26,216 13,016
Long-term debt, less current maturities...................... 5,397 4,397
Stockholders' equity......................................... 5,055 19,255
</TABLE>
- --------
(1) The Company's fiscal years ended on December 31 in 1991, 1992, 1993 and
1994, and on September 30 in 1995, pursuant to a change adopted in 1995,
resulting in a nine-month 1995 fiscal year. Except for Consolidated
Statement of Operations Data for the fiscal years ended December 31, 1993
and 1994 and September 30, 1995, all financial and store data is unaudited.
(2) Reflects inclusion of nine-month audited financial statements for the
fiscal year ended September 30, 1995 and three-month unaudited financial
statements for the quarter ended December 31, 1995, in order to provide a
basis for comparing 12 months of operations in 1995 to prior fiscal years.
(3) The operations of Red River Marine, Inc. acquired in September 1995 are
included for the 1996 period. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and Note 4 of Notes to
Consolidated Financial Statements.
(4) Includes only those stores open for the entire preceding 12-month period.
(5) New stores and upgraded facilities are included in the comparable store
base at the beginning of the store's thirteenth complete month of
operations.
(6) Adjusted to reflect the issuance and sale of the 1,312,500 shares of Common
Stock offered by the Company hereby at an assumed initial public offering
price of $12.00 per share and the application of the estimated net proceeds
therefrom. See "Use of Proceeds."
Except as otherwise noted, all information in this Prospectus (i) reflects a 1-
for-3 stock dividend to be paid prior to the effective date of this offering
and (ii) assumes no exercise of the Underwriters' over-allotment option. See
"Capitalization," "Description of Capital Stock" and "Underwriting."
6
<PAGE>
RISK FACTORS
The discussion in this Prospectus contains forward-looking statements that
involve risks and uncertainties. The Company's actual results could differ
materially from those discussed herein. Factors that could cause or contribute
to such differences include, but are not limited to, the factors set forth
below, those discussed in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and those discussed elsewhere in this
Prospectus. These factors should be considered carefully in evaluating the
Company and its business before purchasing the shares of Common Stock offered
hereby.
IMPACT OF SEASONALITY AND WEATHER ON OPERATIONS
The Company's business, as well as the entire recreational boating industry,
is highly seasonal. Strong sales typically begin in January with the onset of
the public boat and recreation shows, and continue through July. Over the
previous five-year period, the average net sales for the quarterly periods
ended March 31 and June 30 represented in excess of 27% and 37%, respectively,
of the Company's annual net sales. If, for any reason, the Company's sales
were to be substantially below those normally expected during these periods,
the Company's business, financial condition and results of operations would be
materially and adversely affected. The Company generally realizes
significantly lower sales in the quarterly period ending December 31,
resulting in operating losses during that quarter.
The Company's business is also significantly affected by weather patterns
which may adversely impact the Company's operating results. For example,
drought conditions or merely reduced rainfall levels, as well as excessive
rain, may force area lakes to close or render boating dangerous or
inconvenient, thereby curtailing customer demand for the Company's products.
In addition, unseasonably cool weather and prolonged winter conditions may
lead to a shorter selling season in certain locations. Although the Company's
geographic expansion has reduced, and is expected to continue to reduce, the
overall impact on the Company of adverse weather conditions in any one market
area, such conditions will continue to represent potential, material adverse
risks to the Company and its future financial performance. Due to the
foregoing factors, among others, the Company's operating results in some
future quarters may be below the expectations of stock market analysts and
investors. In such event, there could be an immediate and significant adverse
effect on the trading price of the Common Stock. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and "Business--
Seasonality."
IMPACT OF GENERAL ECONOMIC CONDITIONS AND DISCRETIONARY CONSUMER SPENDING
The Company's operations are dependent upon a number of factors relating to
or affecting consumer spending. The Company's operations may be adversely
affected by unfavorable local, regional or national economic developments or
uncertainties regarding future economic prospects that reduce consumer
spending in the markets served by the Company's stores. Consumer spending on
non-essential goods such as recreational boats can also be adversely affected
due to declines in consumer confidence levels, even if prevailing economic
conditions are positive. In an economic downturn, consumer discretionary
spending levels are also reduced, often resulting in disproportionately large
declines in the sale of high-dollar items such as recreational boats. For
example, during the Company's 1988-1990 fiscal years, the Texas economy was
severely depressed due to declines in the financial, oil and gas and real
estate markets. While the Company remained profitable during these periods,
its operating performance declined. There can be no assurance that a similar
economic downturn might not recur in Texas or any other market or that the
Company could remain profitable during any such period. Similarly, rising
interest rates could have a negative impact on consumers' ability or
willingness to obtain financing from third-party lenders, which could also
adversely affect the ability of the Company to sell its products. Changes in
federal and state tax laws including, without limitation, the imposition or
proposed adoption of luxury or similar taxes on certain consumer products,
also influence consumers' decision to purchase products offered by the Company
and could have a negative effect on the Company's sales. Local influences such
as corporate downsizing, military base closings and the Mexican peso
devaluation have adversely affected and may continue to influence the
Company's operations in certain markets. See "Business--Recreational Boating
Industry."
7
<PAGE>
DEPENDENCE UPON EXPANSION
A significant portion of the Company's growth has resulted from, and will
continue to be increasingly dependent upon, the addition of new stores and
continued sales and profitability from existing stores. Since October 1991, at
which time the Company operated five stores in Texas, the Company has opened
or acquired seven new store locations in Texas, Arkansas and Louisiana. During
the time period of fiscal 1991 through fiscal 1995, these new stores have
collectively accounted for approximately 32% of the Company's aggregate net
sales and approximately 43% of aggregate pre-tax income. Comparable store
sales increased 16% in calendar 1995 and 28% in fiscal 1994. Recent rates of
comparable store sales and net income growth are not necessarily indicative of
the comparable store performance that may be achieved by the Company in the
foreseeable future.
The Company intends to continue to pursue a strategy of growth into new
markets through acquiring existing boat retailers, converting compatible
facilities to Travis Boating Centers and building new store facilities.
Accomplishing these goals for expansion will depend upon a number of general
factors, including the identification of new markets in which the Company can
obtain approval to sell its existing or substantially similar product lines,
the Company's financial capabilities, the hiring, training and retention of
qualified personnel and the timely integration of new stores into existing
operations. The acquisition strategy will further depend upon the Company's
ability to locate suitable acquisition candidates at a reasonable cost and to
dispose, timely and effectively, of the acquired entity's remaining inventory,
as well as the ability of the Company to sell its Travis Edition product line
to the customer base of the previous owner. There can be no assurance that the
Company can identify suitable acquisition candidates or complete acquisitions
on terms and conditions favorable to the Company.
The strategy of growth through conversion of compatible facilities to Travis
Boating Centers or the construction of new Travis Boating Centers will further
depend upon the Company's ability (i) to locate and construct suitable
facilities at a reasonable cost in those new markets in which the Company
believes it can obtain adequate market penetration at standard operating
margins without the acquisition of an existing dealer, (ii) to obtain the
reliable data necessary to determine the size and preferences of such
potential markets and (iii) to introduce successfully its Travis Edition line.
There can be no assurance that the Company will be able to open and operate
new stores on a timely or profitable basis. Moreover, the costs associated
with opening such stores may adversely affect the Company's profitability. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business--Growth Strategy."
MANAGEMENT OF GROWTH
The Company has undergone a period of rapid growth. Management has expended
and expects to continue to expend significant time and effort in acquiring and
opening new stores. There can be no assurance that the Company's systems,
procedures and controls will be adequate to support the Company's expanding
operations. The inability of the Company to manage its growth properly could
have a material adverse effect on the Company's business, financial condition
and results of operations.
The Company has recently established a new management information system to
improve its ability to monitor and manage its geographically dispersed stores.
As of the date of this Prospectus, this system is operational in nine of the
Company's 12 stores. Although the Company believes this system will be
operational in all stores in fiscal 1997, there can be no assurance that this
goal can be achieved, that the system will function as planned or that the
system can be integrated smoothly with new store openings and acquisitions.
The Company's planned growth will also impose significant added
responsibilities on members of senior management, including the need to
identify, recruit and integrate new senior level managers and executives, and
the ability to maintain or expand Travis Edition's and Travis Boating Center's
successful appeal to consumers. There is no assurance that any additions to
management can be readily and successfully achieved or that the Company will
be able to continue to grow its business. See "Business--Business Strategy"
and "--Growth Strategy."
8
<PAGE>
RELIANCE ON MANUFACTURERS AND OTHER KEY VENDORS
The Company's success is dependent upon its relationship with, and favorable
pricing arrangements from, a limited number of major manufacturers. In the
event these arrangements were to change or terminate for any reason, including
changes in competitive, regulatory or marketing practices, the Company's
business, financial condition and results of operations could be adversely
affected.
As is typical in the industry, the Company deals with each of its
manufacturers pursuant to an annually renewable, non-exclusive, dealer
agreement that does not contain any contractual provisions concerning product
pricing or required purchasing levels. Pricing is generally established on a
model year basis, but is subject to change at the manufacturer's sole
discretion.
The Company purchased 100% of its outboard motors in 1995 from Outboard
Marine Corporation ("OMC"), the manufacturer of Johnson outboard motors.
Unlike the Company's other dealer agreements, the Company's agreement with OMC
is multi-year in nature. This agreement, which is in the first of three years,
sets forth an established discount level from the then prevailing dealer net
price over the entire term of the agreement. This dealer agreement may be
canceled by either party if the volume of product purchased or available to be
purchased is not maintained at pre-established levels. If the Company's
contract with OMC were canceled or modified, it could have a material adverse
effect on the Company's business, financial condition and results of
operations.
Approximately 27% of the Company's net purchases in 1995 were from a single
boat supplier. The Company also currently purchases a high percentage of the
annual production of a limited number of boat manufacturers. To ensure
adequate inventory levels to support the Company's expansion, it may be
necessary for such manufacturers to increase production levels or allocate a
greater percentage of this production to the Company. In the event that the
operations of the Company's manufacturers were interrupted or discontinued,
the Company could experience temporary inventory shortfalls, or disruptions or
delays with respect to any unfilled purchase orders then outstanding. Although
the Company believes that adequate alternate sources would be available that
could replace a manufacturer as a product resource, there can be no assurance
that such alternate sources will be available at the time of any such
interruption or that alternative products will be available at comparable
quality and prices. The unanticipated failure of any manufacturer or supplier
to meet the Company's requirements with regard to volume or design
specifications, the Company's inability to locate acceptable alternative
manufacturers or suppliers, the Company's failure to have dealer agreements
renewed or to meet certain volume requirements with regard to purchasing, or
any substantial increase in the manufacturer's pricing to the Company, could
have a material adverse effect on the Company's business, financial condition
and results of operations. See "Business--Operations."
LIMITATIONS TO MARKET ENTRY
Under certain of its dealer agreements, the Company must obtain permission
from its manufacturers to sell products in new markets. While the Company has
received permission to sell Johnson motors and various boat lines in its
immediate expansion markets, manufacturers have not granted such permission to
the Company in its broader target markets. There can be no assurance that
these manufacturers will grant permission for the Company to sell in new
markets, or if unable to obtain such permission, that the Company can obtain
suitable alternative sources of supply.
Unlike other states the Company has targeted for expansion, the State of
Oklahoma has restrictions on the location of competing marine dealers that
limit the ability of new entrants in the retail boat industry to compete in
Oklahoma. There can be no assurance that other states will not pass similar or
other restrictions limiting new competition. See "Business--Operations."
COMPETITION
The Company operates in a highly competitive environment. In addition to
facing competition generally from businesses seeking to attract discretionary
spending dollars, the recreational boat industry itself is highly
9
<PAGE>
fragmented, resulting in intense competition for customers, access to quality
products, access to boat show space in new markets and suitable store
locations. The Company relies heavily on boat shows to generate sales. If the
Company is impeded in its ability to participate in boat shows in its existing
or targeted markets, it could have a material adverse effect on the Company's
business, financial condition and results of operations.
The Company competes primarily with single location boat dealers and, to a
lesser degree, with national specialty marine stores, catalog retailers,
sporting goods stores and mass merchants, particularly with respect to parts
and accessories. Dealer competition continues to increase based on the quality
of available products, the price and value of the products and attention to
customer service. There is significant competition both within markets
currently being served by the Company and in new markets into which the
Company plans to enter. The Company competes in each of its markets with
retailers of brands of boats and motors not sold by the Company in that
market. Management believes that a trend in the industry is for manufacturers
to include more features as standard equipment on boats and for dealers to
offer packages comparable to those offered by the Company as its Travis
Edition lines. In addition, several of the Company's competitors, especially
those selling boating accessories, are large national or regional chains that
have substantially greater financial, marketing and other resources than the
Company. There can be no assurance that the Company will be able to compete
successfully in the retail marine industry in the future. See "Business--
Competition."
INCOME FROM FINANCING, INSURANCE AND EXTENDED SERVICE CONTRACTS
A substantial portion of the Company's income results from the origination
and placement of customer financing and the sale of insurance products and
extended service contracts (collectively, "F&I Products"), the most
significant component of which is the income resulting from the Company's
origination of customer financing. The Company's lenders may choose to pursue
this business directly, rather than through intermediaries such as the
Company. Moreover, lenders may impose terms in their boat financing
arrangements with the Company that may be materially unfavorable to the
Company or its customers. For these and other reasons, the Company could
experience a significant reduction in income resulting from reduced demand for
its customer financing programs. In addition, if profit margins are reduced on
sales of F&I Products, or if these products are no longer available, it would
have a material adverse effect on the Company's business, financial condition
and results of operations. Furthermore, under optional extended service
contracts with customers, the Company may experience significant breach of
warranty claims that may, in the aggregate, be material to the Company's
business. See "Business--Operations--Customer Service and Support."
AVAILABILITY OF FINANCING
The Company currently has significant floor plan and other inventory lines
of credit from financial institutions and other lenders, which the Company
believes reflect competitive terms and conditions. While the Company believes
it will continue to obtain comparable financing from these or other lenders,
there can be no assurance that such financing will be available to the
Company. The failure to obtain sufficient financing on favorable terms and
conditions could have a material adverse effect on the business, financial
condition and results of operations of the Company. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Liquidity and Capital Resources."
DEPENDENCE ON KEY PERSONNEL
The Company believes its success depends, in large part, upon the continued
services of key management personnel, including Mark T. Walton, Chairman of
the Board and President; Ronnie L. Spradling, Executive Vice President--New
Store Development; and Michael B. Perrine, Chief Financial Officer, Secretary
and Treasurer; and other key employees. Although the Company has employment
agreements through TBC Management, Ltd. (an affiliated partnership of the
Company) with each of Messrs. Walton, Spradling and Perrine expiring in June
1999, the loss of any of these individuals could materially and adversely
affect the Company, including its business expansion plans. The Company
maintains and is the beneficiary of key-man life insurance policies on Messrs.
Walton and Perrine in the amount of $1 million each, and on Mr. Spradling in
the amount of $500,000. See "Management."
PRODUCT AND SERVICE LIABILITY RISKS
Products sold or serviced by the Company may expose it to potential
liability for personal injury or property damage claims relating to the use of
those products. Additionally, as a result of the Company's activities
10
<PAGE>
in custom packaging its Travis Edition lines, the Company may be included as a
defendant in product liability claims relating to defects in manufacture or
design. Historically, the resolution of product liability claims has not
materially affected the Company's business. The Company generally requires
manufacturers from which it purchases products to supply proof of product
liability insurance. Although the Company maintains third-party product
liability insurance that it believes to be adequate, there can be no assurance
that the Company will not experience legal claims in excess of its insurance
coverage, or claims that are ultimately not covered by insurance. Furthermore,
if any significant claims are made against the Company, the Company's
business, financial condition and results of operations may be adversely
affected by related negative publicity. See "Business--Product Liability."
IMPACT OF ENVIRONMENTAL AND OTHER REGULATORY ISSUES
On October 31, 1994, the U.S. Environmental Protection Agency ("EPA")
announced proposed emissions regulations for outboard marine motors. The
proposed regulations would require a 75% average reduction in hydrocarbon
emissions for outboard motors and set standards for carbon monoxide and
nitrogen oxide emissions as well. Under the proposed regulations,
manufacturers would begin phasing in low emission models in 1998 and have nine
years to achieve full compliance. Costs of comparable new models, if
materially more expensive than previous models, or the manufacturer's
inability to comply with EPA requirements, could have a material adverse
effect on the Company's business, financial condition and results of
operations.
The Company, in the ordinary course of its business, is required to dispose
of certain waste products that are regulated by state or federal agencies.
These products include waste motor oil, tires, batteries and certain paints.
It is the Company's policy to use appropriately licensed waste disposal firms
to handle this refuse. If there were improper disposal of these products, it
could result in potential liability for the Company. Although the Company does
not own or operate any underground petroleum storage tanks, it currently
maintains one above-ground tank, which is subject to registration, testing and
governmental regulation.
Additionally, certain states have required or are considering requiring a
license in order to operate a recreational boat. While such licensing
requirements are not expected to be unduly restrictive, regulations may
discourage potential first-time buyers, thereby limiting future sales, which
could have a material adverse effect on the Company's business, financial
condition and results of operations. See "Business--Environmental and Other
Regulatory Issues."
CONTROL BY OFFICERS AND DIRECTORS
Upon completion of this offering, the executive officers and directors of
the Company will own approximately 53.1% of the issued and outstanding shares
of the Company's Common Stock (49.8% if the Underwriters' over-allotment is
exercised in full). As a result of such ownership, such officers and directors
will have the power effectively to control the Company, including the election
of directors, the determination of matters requiring stockholder approval and
other matters pertaining to corporate governance. See "Principal and Selling
Stockholders."
NO PRIOR MARKET AND POSSIBLE VOLATILITY OF STOCK PRICE
There has been no public trading market for the Company's Common Stock prior
to this offering. The initial public offering price of the Common Stock will
be determined through negotiations between the Company and the Representatives
of the Underwriters. There can be no assurance that an active trading market
will develop and continue after completion of this offering or that the market
price of the Common Stock will not decline below the initial public offering
price. It is anticipated that there will be limited float in the market due to
the relatively low number of shares to be offered to the public and
consequently, fluctuations in the market price for the Common Stock could be
significant. Recent market conditions for newly public companies, as well as
the Company's quarterly variations in operating results due to seasonality and
other factors, are likely to result in significant fluctuations in the market
price for the Common Stock. Future announcements concerning the Company or its
competitors, including government regulations, litigation or changes in
earnings estimates or descriptive materials published by analysts, may also
cause the market price of the Common Stock to fluctuate
11
<PAGE>
substantially. These fluctuations, as well as general economic, political and
market conditions, such as recessions, may adversely affect the market price
of the Common Stock. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Underwriting."
IMMEDIATE AND SUBSTANTIAL DILUTION
Assuming an offering price per share of $12.00, purchasers of the Common
Stock in this offering will experience immediate and substantial dilution in
pro forma net tangible book value of the Common Stock of $7.46, or 62.2%, per
share. See "Dilution."
DIVIDEND POLICY
The Company has never declared or paid cash dividends on its Common Stock
and does not anticipate paying cash dividends in the foreseeable future.
Moreover, the Company's financing covenants under certain of the Company's
current loan agreements restrict the Company's ability to pay dividends. See
"Dividend Policy."
SHARES ELIGIBLE FOR FUTURE SALE
Sales of substantial amounts of the Company's Common Stock in the public
market after this offering, or the perception that such sales may occur, could
have a material adverse effect on the market price of the Common Stock. The
Company, its officers and directors and certain stockholders, holding, in the
aggregate, 2,683,506 shares of Common Stock prior to the offering, have agreed
that they will not, directly or indirectly, offer, sell, grant any option to
purchase or otherwise dispose of any shares of Common Stock of the Company or
any securities convertible or exchangeable therefor, for a period of 180 days
after the date of this Prospectus without the prior written consent of
Robertson, Stephens & Company. Of the 3,996,006 shares of Common Stock to be
outstanding after the offering (4,258,506 shares if the Underwriters' over-
allotment option is exercised in full), the 1,750,000 shares of Common Stock
being offered hereby (2,012,500 shares if the Underwriters' over-allotment
option is exercised in full) will be freely tradeable without restriction or
further registration under the Securities Act of 1933, as amended (the
"Securities Act"); and 2,594,159 shares will become eligible for sale pursuant
to Rule 144 ("Rule 144") under the Securities Act upon expiration of the 180-
day period. Furthermore, the Company intends, 90 days after the closing of the
offering, to register 200,000 shares of Common Stock reserved for issuance to
its employees, directors and consultants upon exercise of options available
for grant under the Incentive Stock Plan and 133,867 shares of Common Stock
that may be purchased under the Option Agreements (as hereinafter defined). No
prediction can be made as to the effect, if any, that future sales of shares,
or the availability of shares for future sale, will have on the market price
of the Common Stock prevailing from time to time. See "Shares Eligible for
Future Sale," "Principal and Selling Stockholders" and "Management--Stock
Option Plans and Agreements."
ANTI-TAKEOVER EFFECT OF ARTICLES AND BYLAW PROVISIONS
The Company's Articles of Incorporation provide that up to 1,000,000 shares
of preferred stock may be issued by the Company from time to time in one or
more series. The Board of Directors is authorized to determine the rights,
preferences, privileges and restrictions granted to and imposed upon any
unissued series of preferred stock and to fix the number of shares of any
series of preferred stock and the designation of any such series, without any
vote or action by the Company's stockholders. The Board of Directors may
authorize and issue preferred stock with voting or conversion rights that
could adversely affect the voting power or other rights of the holders of
Common Stock. In addition, the issuance of preferred stock could have the
effect of delaying, deferring or preventing a change in control of the
Company. The Company's Articles of Incorporation also allow the Board of
Directors to fix the number of directors in the Bylaws with no minimum or
maximum number of directors required. The Company's Bylaws currently provide
that the Board of Directors shall be divided into three classes of two or
three directors each, with each class elected for three-year terms expiring in
successive years. The effect of these provisions may be to delay or prevent a
tender offer or takeover attempt that a stockholder might consider to be in
his best interest, including attempts that might result in a premium over the
market price for the shares held by the stockholders. See "Management" and
"Description of Capital Stock--Anti-Takeover Provisions."
12
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of 1,312,500 shares of Common
Stock offered by the Company hereby (net of underwriting discounts and
commissions and estimated offering expenses) are estimated to be approximately
$14.2 million, assuming an initial public offering price of $12.00 per share.
The Company will not receive any proceeds from the sale of shares of Common
Stock by the Selling Stockholders.
The Company intends to use the net proceeds to repay the following
outstanding bank and other indebtedness: (i) approximately $13.2 million to
reduce floor plan and other inventory revolving lines of credit payable to
commercial banks, bearing interest at a floating rate of prime plus 0.25% to
1.0%, and maturing in July and August 1996; (ii) $211,622 to repay a mortgage
note payable to an unaffiliated individual, bearing interest at 10.5% and
maturing in September 2000; and (iii) approximately $750,000 to repay
indebtedness incurred in connection with the acquisition of Red River Marine,
Inc. and Red River Marine, Inc. #2 in Arkansas in September 1995, which
consists of two notes, bearing interest at 8.75% and maturing in November 1997
and November 2002, respectively.
The Company plans to use reborrowings under its revolving lines of credit
for general corporate purposes, including working capital, expansion into new
markets and for financing of possible acquisitions. Although the Company
constantly evaluates acquisition opportunities, there currently are no
negotiations with respect to any acquisitions. See "Risk Factors--Dependence
Upon Expansion" and "Business--Growth Strategy."
DIVIDEND POLICY
The Company has never declared or paid cash dividends on its Common Stock
and presently has no plans to do so. Any change in the Company's dividend
policy will be at the sole discretion of the Board of Directors and will
depend on the Company's profitability, financial condition, capital needs,
future loan covenants, general economic conditions, future prospects and other
factors deemed relevant by the Board of Directors. The Company currently
intends to retain earnings for use in the operation and expansion of the
Company's business and does not anticipate paying cash dividends in the
foreseeable future. Certain covenants contained in the Company's loan
agreements effectively restrict the payment of any dividends without the
lender's prior consent. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources."
13
<PAGE>
CAPITALIZATION
The following table sets forth the consolidated short-term debt and
capitalization of the Company at March 31, 1996, and as adjusted to give
effect to the sale of the 1,312,500 shares of Common Stock offered by the
Company at an assumed initial public offering price of $12.00 per share after
deducting underwriting discounts and commissions and estimated offering
expenses and the application of the estimated net proceeds therefrom. See "Use
of Proceeds." This table should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Company's Consolidated Financial Statements and Notes thereto included
elsewhere herein.
<TABLE>
<CAPTION>
MARCH 31, 1996
-------------------
ACTUAL AS ADJUSTED
------- -----------
(In thousands)
<S> <C> <C>
Short-term debt, including current maturities of long-term
debt...................................................... $26,216 $13,016
======= =======
Long-term debt, less current maturities.................... $ 5,397 $ 4,397
Stockholders' equity:
Serial preferred stock, $.01 par value, 1,000,000 shares
authorized; none issued or outstanding.................. -- --
Common stock, $.01 par value, 50,000,000 shares autho-
rized, 2,683,506 issued and outstanding; 3,996,006 is-
sued and outstanding as adjusted(1)..................... 27 40
Additional paid-in capital............................... 139 14,326
Retained earnings........................................ 4,889 4,889
------- -------
Total stockholders' equity.............................. 5,055 19,255
------- -------
Total capitalization................................... $10,452 $23,652
======= =======
</TABLE>
- --------
(1) Excludes (i) an aggregate of 133,867 shares of Common Stock issuable upon
the exercise of outstanding non-statutory stock options at an exercise
price of $5.25 per share and (ii) 200,000 shares of Common Stock reserved
for issuance under the Company's Incentive Stock Plan. See "Management--
Stock Option Plans and Agreements."
14
<PAGE>
DILUTION
At March 31, 1996, the net tangible book value of the Company was
approximately $4.0 million or $1.47 per share of Common Stock. "Net tangible
book value per share" represents the amount of the Company's total tangible
assets less total liabilities, divided by the number of shares of Common Stock
outstanding.
Dilution in net tangible book value per share represents the difference
between the amount paid by purchasers of shares of Common Stock in this
offering and the net tangible book value per share of Common Stock immediately
after completion of this offering. After giving effect to the sale by the
Company of 1,312,500 shares of Common Stock offered hereby at an assumed
initial public offering price of $12.00 per share (the midpoint of the
estimated public offering price range), and after deducting estimated
underwriting discounts and commissions and offering expenses, the net tangible
book value of the Company at March 31, 1996 would have been approximately
$18.2 million or $4.54 per share. This amount represents an immediate increase
in net tangible book value of $3.07 per share of Common Stock to existing
stockholders and an immediate dilution in net tangible book value of $7.46 per
share to purchasers of Common Stock in the offering as illustrated in the
following table:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share................ $12.00
------
Net tangible book value per share at March 31, 1996........... $1.47
Increase per share attributable to the new investors.......... 3.07
-----
Net tangible book value per share after this offering.......... 4.54
------
Dilution of net tangible book value per share to new invest-
ors........................................................... $ 7.46
======
</TABLE>
The following table sets forth since March 31, 1991, the number of shares of
Common Stock purchased from the Company, the total consideration and the
average consideration per share paid by the stockholders and to be paid by new
investors purchasing shares of Common Stock in this offering assuming an
initial public offering price of $12.00 per share:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
----------------- ------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders(1)... 123,435 8.6% $ 145,604 0.9% $1.17
New investors.............. 1,312,500 91.4% 15,750,000 99.1% 12.00
--------- ----- ----------- -----
Total.................... 1,435,935 100.0% $15,895,604 100.0%
========= ===== =========== =====
</TABLE>
- --------
(1) Excludes (i) an aggregate of 133,867 shares of Common Stock issuable upon
the exercise of outstanding non-statutory stock options at an exercise
price of $5.25 per share and (ii) 200,000 shares reserved for issuance
under the Company's Incentive Stock Plan. See "Management--Stock Option
Plans and Agreements." To the extent outstanding stock options are
exercised, there will be additional dilution to new investors.
15
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data presented below as of and for the
year ended December 31, 1994 and as of and for the nine months ended September
30, 1995 comprising fiscal 1995 was derived from the Company's consolidated
financial statements, which were audited by Ernst & Young LLP, independent
auditors, whose report with respect thereto, together with such consolidated
financial statements, appear elsewhere herein. The selected consolidated
financial data presented below as of and for the year ended December 31, 1993
was derived from the Company's consolidated financial statements, which were
audited by Devona Jeffery, L.L.C., independent auditors, whose report with
respect thereto, together with such consolidated financial statements, appear
elsewhere herein. The selected consolidated financial data presented below as
of and for the years ended December 31, 1991 and 1992, and as of and for the
six-month periods ended March 31, 1995 and 1996, was derived from unaudited
consolidated financial statements (which, with respect to the 1991 and 1992
fiscal years, are not presented herein). In the opinion of management of the
Company, the unaudited consolidated financial statements include all
adjustments (consisting only of normal recurring adjustments) necessary to
present fairly the financial information included herein. The information set
forth below should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the Company's
Consolidated Financial Statements and related Notes thereto appearing
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
SIX MONTHS
FISCAL YEAR TWELVE MONTHS ENDED
FISCAL YEAR ENDED DECEMBER 31,(1) ENDED ENDED MARCH 31,(3)
-------------------------------------- SEPTEMBER 30, DECEMBER 31, ----------------
1991 1992 1993 1994 1995(1) 1995(2) 1995 1996
-------- -------- -------- -------- ------------- ------------- ------- -------
(In thousands, except per share and certain store data)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT
OF OPERATIONS DATA:
Net sales.............. $ 13,796 $ 18,317 $ 25,757 $ 37,225 $41,442 $45,006 $16,627 $22,017
Gross profit........... 3,241 4,193 5,946 8,734 10,306 11,254 3,774 5,571
Selling, general and
administrative
expenses.............. 2,443 3,293 4,496 6,333 6,353 7,904 3,217 4,302
Operating income....... 698 767 1,270 2,135 3,736 3,007 420 1,007
Interest expense....... 538 462 449 629 670 946 371 669
Net income............. 202 255 596 1,023 2,050 1,408 98 243
Net income per share... $ 0.08 $ 0.10 $ 0.23 $ 0.39 $ 0.76 $ 0.53 $ 0.04 $ 0.09
Weighted avg. shares
outstanding........... 2,612 2,612 2,612 2,648 2,684 2,684 2,684 2,684
STORE DATA:
Stores open at period
end................... 6 7 7 8 11 12 9 12
Average sales per
store(4).............. $ 2,747 $ 3,025 $ 3,679 $ 4,653 $ 4,886 $ 4,946 $ 1,981 $ 2,046
Percentage increase in
comparable store
sales(5).............. 4.7% 7.4% 25.6% 28.4% 5.0% 16.0% 22.6% 6.4%
<CAPTION>
TWELVE MONTHS
TWELVE MONTHS ENDED
DECEMBER 31, ENDED DECEMBER 31,
-------------------------------------- SEPTEMBER 30, DECEMBER 31, ----------------
1991 1992 1993 1994 1995 1995(2) 1995 1996
-------- -------- -------- -------- ------------- ------------- ------- -------
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE
SHEET DATA:
Cash and cash
equivalents........... $ 187 $ 104 $ 139 $ 259 $ 996 $ 673 $ 0 $ 665
Working capital........ 291 874 11 1,866 2,808 1,855 3,824 2,616
Total assets........... 7,489 9,727 14,088 17,434 23,357 35,590 22,813 41,898
Short-term debt,
including current
maturities of long-
term debt............. 5,119 6,798 10,608 10,977 11,443 24,776 15,085 26,216
Long-term debt less
current maturities.... 915 1,538 1,013 2,588 4,876 5,426 2,035 5,397
Stockholders' equity... 658 814 1,485 2,562 4,812 4,097 4,363 5,055
</TABLE>
- --------
(1) The Company's fiscal years ended on December 31 in 1991, 1992, 1993 and
1994, and on September 30 in 1995, pursuant to a change adopted in 1995,
resulting in a nine-month 1995 fiscal year. Except for Consolidated
Statement of Operations Data for the fiscal years ended December 31, 1993
and 1994 and September 30, 1995, all financial and store data is
unaudited.
(2) Reflects inclusion of nine-month audited financial statements for the
fiscal year ended September 30, 1995 and three-month unaudited financial
statements for the quarter ended December 31, 1995, in order to provide a
basis for comparing 12 months of operations in 1995 to prior fiscal years.
(3) The operations of Red River Marine, Inc. acquired in September 1995 are
included for the 1996 period. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and Note 4 of Notes to
Consolidated Financial Statements.
(4) Includes only those stores open for the entire preceding 12-month period.
(5) New stores or upgraded facilities are included in the comparable store
base at the beginning of the store's thirteenth complete month of
operations.
16
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The discussion in this section of the Prospectus contains forward-looking
statements that involve risks and uncertainties. The Company's actual results
could differ materially from those discussed herein. Factors that could cause
or contribute to such differences include, but are not limited to, those
discussed in this section, those discussed in "Risk Factors" and those
discussed elsewhere in this Prospectus.
GENERAL OVERVIEW
Travis Boats is a leading multi-state superstore retailer of recreational
boats, motors, trailers and related marine accessories in the southern United
States. The Company, which currently operates 12 superstores under the name
Travis Boating Center in Texas, Arkansas and Louisiana, differentiates itself
from competitors by providing customers a unique superstore shopping
experience that showcases a broad selection of high quality boats, motors,
trailers and related marine accessories at firm, clearly posted low prices.
Each superstore also offers complete customer service and support, including
in-house financing programs and full-service repair facilities staffed by
factory-trained mechanics.
The Company was founded and opened its initial store in Austin, Texas in
1979. During the 1980's, the Company expanded into San Antonio, Texas with the
construction of a new store facility. The Company subsequently made
acquisitions of boat retailers operating within the Texas markets of Midland,
Dallas and Abilene. It was during this initial period of expansion that the
Company began developing the systems necessary to manage a multi-store
operation and leveraging the economies of scale associated with volume
purchasing. The Company's success in these areas led to the Travis Edition
packaging concept and the Company's pricing philosophy. Since 1991, the
Company has opened or acquired seven stores in new markets, while increasing
average sales per store from $2.7 million to $4.9 million. New store openings,
existing store sales increases and acquisitions have increased net sales to
$41.4 million for the nine-month period comprising fiscal 1995 from $13.8
million in fiscal 1991, with net income having increased to $2.1 million from
approximately $202,000 over the same period.
The Company acquired substantially all of the assets of Red River Marine,
Inc. ("Red River Marine") on September 20, 1995. Red River Marine, a leading
boat retailer in Arkansas, operates stores in the resort communities of Hot
Springs and Heber Springs. The Company also acquired substantially all of the
assets of Clay's Boats & Motors, Inc., the operator of a single store location
in New Iberia, Louisiana on December 1, 1995. The results of operations of Red
River Marine and Clay's Boats & Motors from the acquisition dates through
March 31, 1996 are included in the discussion below.
The Company's business, as well as the sales demand for various types of
boats, tends to be highly seasonal. See "--Quarterly Data and Seasonality."
Effective September 30, 1995, the Company elected to change its fiscal year
end from December 31 to September 30. This change was made to establish a
fiscal year that more closely conforms to the business cycle of the Company.
The following discussion compares fiscal year 1994 to calendar year 1995,
which reflects the inclusion of nine-month audited consolidated financial
statements for the fiscal year ended September 30, 1995 and three-month
unaudited consolidated financial statements for the quarter ended December 31,
1995 in order to provide a basis for comparing 12 months of operations. See
"--Quarterly Data and Seasonality."
The following discussion and analysis of financial condition and results of
operations of the Company should be read in conjunction with the Consolidated
Financial Statements of the Company, including the related Notes thereto,
appearing elsewhere in this Prospectus.
17
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated certain financial
data as a percentage of net sales:
<TABLE>
<CAPTION>
SIX MONTHS
FISCAL ENDED
YEARS ENDED TWELVE MONTHS MARCH 31,
------------------- ENDED ------------
1993 1994 1995 DECEMBER 31, 1995 1995 1996
----- ----- ----- ----------------- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Net sales................ 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Costs of goods sold...... 76.9 76.5 75.1 75.0 77.3 74.7
----- ----- ----- ----- ----- -----
Gross profit............. 23.1 23.5 24.9 25.0 22.7 25.3
Selling, general and
administrative
expenses................ 17.5 17.0 15.3 17.6 19.4 19.5
----- ----- ----- ----- ----- -----
Operating income......... 4.9 5.8 9.0 6.7 2.5 4.6
Interest expense......... 1.7 1.7 1.6 2.1 2.2 3.0
Other income............. 0.3 0.2 0.3 0.0 0.7 0.1
----- ----- ----- ----- ----- -----
Income before income tax-
es...................... 3.5 4.3 7.7 4.9 1.0 1.7
Income tax expense....... 1.2 1.5 2.8 1.9 0.4 0.6
----- ----- ----- ----- ----- -----
Net income............... 2.3% 2.8% 4.9% 3.1% 0.6% 1.1%
===== ===== ===== ===== ===== =====
</TABLE>
SIX MONTHS ENDED MARCH 31, 1996 COMPARED TO SIX MONTHS ENDED MARCH 31, 1995
Net sales. Net sales increased by 32.5% to $22.0 million in the six months
ended March 31, 1996 from $16.6 million in the six months ended March 31,
1995. Of this increase, $560,000 was attributable to 6.4% growth in comparable
store sales and $4.8 million resulted from net sales of store locations that
were built, upgraded or acquired subsequent to March 31, 1995 and therefore
were not yet includable in comparable store sales. Net sales benefitted from
general growth in overall store sales volume, the participation in additional
season-opening boat shows and a new sales program featuring weekend sales
shows in the parking lots of local Sam's Clubs. The Sam's program was
initiated in late 1995.
Gross profit. Gross profit increased by 47.4% to $5.6 million in the six
months ended March 31, 1996 from $3.8 million in the six months ended March
31, 1995. Gross profit as a percent of sales increased to 25.3% in the six
months ended March 31, 1996 from 22.7% in the six months ended March 31, 1995.
Increased net sales attributable to F&I Products contributed $951,000, or
17.1%, of total gross profit for the six months ended March 31, 1996, as
compared to $408,000, or 10.7%, of total gross profit in the six months ended
March 31, 1995. This improvement was primarily due to higher net spreads
achieved in the placement of customer financing, as well as overall increases
in the percentage of customers buying these products (which is referred to
herein as "sell-through"). Net sales attributable to F&I Products are reported
on a net basis (with associated costs included in selling, general and
administrative expenses), and therefore all of such sales contribute directly
to the Company's gross profit.
Selling, general and administrative expenses. Selling, general and
administrative expenses increased by 34.4% to $4.3 million for the six months
ended March 31, 1996 from $3.2 million for the six months ended March 31,
1995. Selling, general and administrative expenses as a percent of net sales
increased to 19.5% for the six months ended March 31, 1996 from 19.4% for the
six months ended March 31, 1995. The increase in selling, general and
administrative expenses, both in terms of dollars and as a percent of net
sales, was primarily attributable to increased expenses associated with the
operation of a larger store network, the Company's participation in additional
season-opening boat shows and the expenses related to the implementation of
the Company's management information system in three stores acquired in the
latter part of 1995. Selling, general and administrative expenses as a percent
of net sales are typically at the highest levels during the quarters ended
December 31 and March 31 because of the Company's fixed overhead expenses and
the seasonal nature of its annual sales.
18
<PAGE>
Interest expense. Interest expense increased by 80.3% to $669,000 in the six
months ended March 31, 1996 from $371,000 in the six months ended March 31,
1995. This resulted in an increase in interest expense as a percent of net
sales to 3.0% in the 1996 period from 2.2% in the 1995 period. The increase was
primarily the result of the additional debt incurred in the acquisition of Red
River Marine as well as higher balances on the Company's floor plan lines of
credit necessary to support inventory requirements for additional stores and
projected increases in net sales.
Net income. Net income increased by 148% to $243,000 in the six months ended
March 31, 1996 from $98,000 in the six months ended March 31, 1995. Net income
as a percent of sales increased to 1.1% from 0.6% during the same periods. The
Company generally experiences lower net income as a percent of net sales during
the first six months of its fiscal year due to the seasonal nature of its
annual sales. See "--Quarterly Data and Seasonality."
CALENDAR YEAR 1995 COMPARED TO FISCAL 1994
Net sales. Net sales increased by 21.0% to $45.0 million in calendar year
1995 from $37.2 million in fiscal 1994. Of this increase, $4.4 million was
attributable to 16.0% growth in comparable store sales in calendar 1995 and
$3.4 million of this increase was due to the operations of the stores that were
built, upgraded or acquired in 1995 and therefore were not yet includable in
comparable store sales.
The increase in comparable store sales was primarily the result of the
Company's introduction of several new Travis Edition boat lines appealing to
customer groups previously not successfully captured by the Company. These new
boat lines included the Viper line of high performance bass boats, the
Aquasport line of off-shore fishing boats and the Sea Ark line of aluminum
fishing boats. These lines collectively accounted for $2.7 million of calendar
1995 net sales.
Notwithstanding these increases, the rate of increase in comparable store
sales in 1995 reflected diminished growth from the rates of increase for fiscal
1994 and 1993. Management attributes the substantial growth in comparable store
sales during fiscal 1994 and 1993 primarily to the small number of stores
includable in the comparable store base and the significant increase in the
number of models of Travis Edition packages made available for sale resulting
from the Company having entered into sales agreements with additional new
manufacturers and through the development of additional models with existing
manufacturers. While the Company expects comparable store sales growth to
continue due to planned enhancements in product lines, this growth is not
expected to continue at historical levels.
Gross profit. Gross profit increased by 29.9% to $11.3 million in calendar
1995 from $8.7 million in fiscal 1994. This increase was primarily due to the
increase in net sales and because gross profit as a percent of net sales
increased to 25.0% from 23.5% during the period.
Gross profit attributable to sales of F&I Products was $1.6 million, or
14.2%, of total gross profit in calendar 1995 compared to $1.1 million, or
12.6%, of total gross profit in fiscal 1994. This increase was mainly due to
increased revenues from the origination and placement of customer financing,
partially caused by selected lenders offering more beneficial programs.
Selling, general and administrative expenses. Selling, general and
administrative expenses increased by approximately 25.4% to $7.9 million in
calendar 1995 from $6.3 million in fiscal 1994. Selling, general and
administrative expenses as a percent of net sales increased to 17.6% in
calendar 1995 from 17.0% in fiscal 1994. The increase was primarily the result
of the increased variable expenses related to the net sales increase and, to a
lesser extent, those expenses attributable to integrating the three recently
acquired stores. During calendar 1995, corporate overhead expenses and store
management salaries accounted for approximately $1.4 million of total
19
<PAGE>
selling, general and administrative expenses compared to approximately $1.1
million for fiscal 1994. The majority of Travis Boats' work force is
compensated by commission; accordingly, increased sales volume leads to higher
commissions and payroll taxes. Due to the significant increase in net sales,
however, gross wages as a percent of net sales declined to approximately 10.0%
of net sales in calendar 1995 from approximately 11.4% of net sales in fiscal
1994.
Interest expense. Interest expense increased by approximately 50.4% to
$946,000 in calendar 1995 from $629,000 in fiscal 1994. This resulted in an
increase of interest expense as a percent of net sales to 2.1% in calendar
1995 from 1.7% in fiscal 1994. The increase in interest expense was primarily
the result of higher balances outstanding on the Company's floor plan lines of
credit to support the increased sales levels and higher effective interest
rates during calendar 1995. Interest expense was also affected by the
incremental interest expense associated with the acquisition indebtedness
relating to the new stores in Arkansas and Louisiana.
Net income. Net income increased by 40.0% to $1.4 million in calendar 1995
from $1.0 million in fiscal 1994. This was due primarily to the increased
sales volume, greater sell-through of F&I Products and improved leverage of
general and administrative expenses. The Company's net income as a percent of
net sales increased to 3.1% in calendar 1995 from 2.8% in fiscal 1994.
FISCAL 1994 COMPARED TO FISCAL 1993
Net sales. Net sales increased by 44.2% to $37.2 million in fiscal 1994 from
$25.8 million in fiscal 1993. Of this increase, $5.2 million was attributable
to 28.4% growth in comparable store sales and $6.2 million was due to the
operations of the store locations that were built, upgraded or acquired during
fiscal 1994 and therefore were not yet includable in comparable store sales.
The increase in comparable store sales was primarily the result of the
substantial sales growth in boat lines that the Company first introduced as
Travis Editions in fiscal 1993. The Sprint line of fishing boats and the
Larson line of family runabouts were able to gain rapid customer acceptance
with combined net sales growth of $4.7 million during fiscal 1994.
Gross profit. Gross profit increased by 45.0% to $8.7 million in fiscal 1994
from $5.9 million in fiscal 1993. This increase was primarily due to the
increase in net sales and the origination and placement of customer financing.
Gross profit attributable to sales of F&I Products was $1.1 million, or 12.6%
of total gross profit in 1994, compared to $717,000, or 12.2% of total gross
profit in 1993. In fiscal 1994, the Company improved training programs and
sell-through goals for F&I Products sales personnel. Gross profit as a percent
of sales increased to 23.5% in fiscal 1994 from 23.1% in fiscal 1993.
Selling, general and administrative expenses. Selling, general and
administrative expenses increased by 40.0% to $6.3 million in fiscal 1994 from
$4.5 million in fiscal 1993. Selling, general and administrative expenses as a
percent of net sales were 17.0% in fiscal 1994 as compared to 17.5% in fiscal
1993. The decrease in selling, general and administrative expenses as a
percent of net sales from fiscal 1993 to fiscal 1994 was primarily due to the
significant increase in net sales relative to the level of fixed selling,
general and administrative expenses.
Interest expense. Interest expense increased by 40.1% to $629,000 in fiscal
1994 from $449,000 in fiscal 1993. Interest expense as a percent of net sales
was 1.7% during both periods.
Net income. Net income increased by approximately 67.8% to $1.0 million in
fiscal 1994 from $596,000 in fiscal 1993. Net income as a percent of sales
increased to 2.8% in fiscal 1994 from 2.3% in fiscal 1993. This increase was
due primarily to increased sales volume, greater sell-through of F&I Products
and better leverage on general and administrative expenses.
20
<PAGE>
QUARTERLY DATA AND SEASONALITY
The following table sets forth certain unaudited quarterly financial data
for each of the Company's last nine quarters and such data expressed as a
percentage of the Company's net sales for the respective quarters. The
information has been derived from unaudited financial statements that, in the
opinion of management, reflect all adjustments (consisting only of normal
recurring adjustments) necessary for a fair presentation of such quarterly
information. The operating results for any quarter are not necessarily
indicative of the results to be expected for any future period.
<TABLE>
<CAPTION>
QUARTER ENDED
-----------------------------------------------------------------------------------
FISCAL YEAR 1994 FISCAL YEAR 1995 FISCAL YEAR 1996
----------------------------------- --------------------------- -----------------
MARCH 31 JUNE 30 SEPT. 30 DEC. 31 MARCH 31 JUNE 30 SEPT. 30 DEC. 31 MARCH 31
-------- ------- -------- ------- -------- ------- -------- ------- --------
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales............... $10,250 $14,908 $8,892 $3,175 $13,452 $17,048 $10,942 $3,564 $18,453
Gross profit............ 2,380 3,626 2,220 508 3,266 4,300 2,740 948 4,624
Selling, general and
administrative
expenses............... 1,560 2,020 1,580 1,173 2,044 2,347 1,962 1,551 2,751
Operating income
(loss)................. 753 1,540 574 (732) 1,152 1,883 701 (729) 1,736
Interest expense........ 144 145 166 174 196 265 209 276 393
Net income (loss)....... 404 915 268 (564) 662 1,046 342 (639) 882
<CAPTION>
AS A PERCENTAGE OF NET SALES
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales............... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Gross profit............ 23.2 24.3 25.0 16.0 24.3 25.2 25.0 26.6 25.1
Selling, general and
administrative
expenses............... 15.2 13.5 17.8 36.9 15.2 13.8 17.9 43.5 14.9
Operating income
(loss)................. 7.3 10.3 6.5 (23.1) 8.6 11.0 6.4 (20.5) 9.4
Interest expense........ 1.4 1.0 1.9 5.5 1.5 1.6 1.9 7.7 2.1
Net income (loss)....... 3.9 6.1 3.0 (17.8) 4.9 6.1 3.1 (17.9) 4.8
</TABLE>
The Company's business, as well as the sales demand for various types of
boats, tends to be highly seasonal. Strong sales typically begin in January
with the onset of the public boat and recreation shows, and continue through
July. Over the previous five-year period, the average net sales for the
quarterly periods ended March 31 and June 30 represented in excess of 27% and
37%, respectively, of the Company's annual net sales. With regard to net
income, the Company historically generates profits in three of its fiscal
quarters and experiences operating losses in the quarter ended December 31 due
to a broad seasonal slowdown in sales. During the quarter ended September 30,
inventory reaches its lowest levels and cash reserves and profit reach the
highest levels. During the quarter ended December 31, the Company generally
builds inventory levels in preparation for the upcoming selling season which
begins with boat and recreation shows occurring in January and February in
certain market areas in which the Company conducts business. Travis Boats'
operating results would be materially and adversely affected if net sales were
to fall significantly below historical levels during the months of January
through June.
21
<PAGE>
The Company's business is also significantly affected by weather patterns.
Weather conditions that are unseasonable or unusual may adversely affect the
Company's results of operations. For example, drought conditions or merely
reduced rainfall levels, as well as excessive rain, may affect the Company's
sale of boating packages and related products and accessories. While
management believes that the Company's quarterly net sales will continue to be
impacted by seasonality, quarterly results may become less susceptible to
certain regional weather conditions as expansion occurs throughout the
southern United States.
Quarterly results may fluctuate as a result of the expenses associated with
new store openings or acquisitions. The Company attempts to concentrate
expansion during the seasonal slowdown generally occurring in the quarter
ending December 31. Stores opened during this time period will generate
additional operating losses, at a minimum, until the second quarter.
Accordingly, the results for any quarterly period may not be indicative of the
expected results for any other quarterly period.
LIQUIDITY AND CAPITAL RESOURCES
The Company's short-term cash needs are primarily for working capital to
support operations including inventory requirements, off-season liquidity and
store expansion. These short-term cash needs have historically been financed
with cash from operations and borrowings under the Company's credit
facilities. At March 31, 1996, the Company had working capital of $2.6
million, including $4.5 million in accounts receivable (primarily contracts in
transit from sales) and $28.7 million in inventories, offset by approximately
$736,000 of accounts payable, $24.2 million outstanding under floor plan lines
of credit, approximately $650,000 under open lines of credit and $1.3 million
in other short-term indebtedness including current maturities of long-term
debt. Contracts in transit are amounts receivable from a customer's financial
institution related to that customer's purchase of a boat. As of March 31,
1996, the aggregate maximum borrowing limits under floor plan and working
capital lines of credit were approximately $38.6 million and $850,000,
respectively.
Operating activities provided cash flows of $2.7 million for fiscal 1995 due
primarily to net income of $2.1 million and changes in working capital. For
the six months ended March 31, 1996, operating activities utilized cash flows
of $14.4 million due primarily to increases in inventories and accounts
receivable of $14.3 million and $3.4 million, respectively, offset partially
by unearned revenue of $2.8 million relating to a volume purchase from a
manufacturer (which is not expected to occur in future periods) . Financing
activities provided $15.2 million of cash flows from increased borrowings.
Increases in inventories have been financed with borrowings under the
Company's floor plan and working capital lines of credit. These credit lines
are collateralized by security interests in specific inventories, accounts
receivable and contracts in transit. The floor plan and working capital lines
with commercial banks are generally annually renewable and bear interest at
floating rates ranging from .25% to 1% above the bank's prime rate. The floor
plan lines of credit maintained with finance companies generally have no
stated maturity and utilize subsidies from manufacturers to provide for
certain interest free periods each calendar year (usually August through
April). Certain lines of credit are governed by loan agreements containing
certain financial covenants concerning, among others, minimum tangible net
worth, leverage ratio, debt service coverage and maximum annual capital
expenditures. As of March 31, 1996, management believes the Company was in
compliance with the terms and conditions of its loan agreements.
Merchandise inventories were $13.5 million and $14.3 million as of December
31, 1994 and September 30, 1995, respectively, and $28.7 million as of March
31, 1996. The significant increase in merchandise inventories from September
30, 1995 to March 31, 1996 was attributable to a volume purchase from a
manufacturer. Accounts receivable increased from approximately $1.0 million at
the end of fiscal 1995 to $4.5 million as of March 31, 1996. This amount
represents primarily contracts in transit generated from sales. The increase
was due to the higher level of sales in the second fiscal quarter. Costs in
excess of net assets acquired increased to $1.1 million in fiscal 1995 due to
the acquisition of Red River Marine in September 1995.
The Company had net capital expenditures of $1.1 million in fiscal 1993 and
approximately $937,000 in fiscal 1994, primarily related to the construction
of new superstore boating centers in Austin, Texas and
22
<PAGE>
Lewisville (Dallas), Texas. During fiscal 1995, the Company purchased the
facility previously leased in Baton Rouge, Louisiana for approximately
$590,000, completed construction of the superstore in Lewisville (Dallas),
Texas and acquired substantially all of the assets of Red River Marine for
approximately $2.5 million. These capital expenditures were substantially
financed with long-term debt provided by commercial banks and individuals at
fixed interest rates.
23
<PAGE>
BUSINESS
GENERAL
Background. Travis Boats is a leading multi-state superstore retailer of
recreational boats, motors, trailers and related marine accessories in the
southern United States. The Company currently operates 12 superstores in
Texas, Arkansas and Louisiana under the name Travis Boating Center. Founded in
1979 in Austin, Texas, Travis Boats differentiates itself from competitors by
providing customers a unique superstore shopping experience that showcases a
broad selection of high quality boats, motors, trailers and marine products at
firm, clearly posted low prices. Each superstore also provides in-house
financing programs and full-service repair facilities staffed by factory-
trained mechanics.
The Company sells approximately 40 different models of brand-name fishing,
water-skiing and general recreational boats, along with motors, trailers,
accessories and related equipment. Personal watercraft, off-shore fishing
boats and cabin cruisers are also offered for sale at selected store
locations. Boats sold generally range in size from 16 to 23 feet at prices
ranging from $7,500 to $23,000 with an average boat purchase price of
approximately $12,000. The Company custom designs and pre-packages
combinations of popular types and sizes of brand-name boats, such as
Aquasport, Cajun and Larson, with Johnson outboard and other motors, trailers
and numerous accessories, under its proprietary Travis Edition product line.
These signature Travis Edition packages, which account for the vast majority
of total new boat sales, have been designed and developed in coordination with
the manufacturers and often include distinguishing features and accessories
that have historically been unavailable to, or listed as optional by, many
competitors. These factors enable the Company to provide the customer with an
exceptional product that is competitively priced and conveniently packaged for
immediate enjoyment.
Unit level economics. The Company's new store prototype costs approximately
$825,000, excluding the cost of the land and has 20,000 square feet of
enclosed space. Initial pre-opening expenses of approximately $50,000 are
typically required for newly built, upgraded or acquired stores. Initial
inventories total approximately $2.1 million, substantially all of which are
financed by manufacturers' programs or through floor plan financing
arrangements and typically result in no net additional capital investment by
the Company. The Company's new store model is expected to generate $5.0
million in net sales and produce an operating contribution to the Company of
approximately $250,000, resulting in a return on invested capital of
approximately 30%. Existing stores operational during the entire 1995
experienced 1995 sales ranging from $2.6 million to $7.9 million. Average
existing store sales were $4.9 million with an average operating contribution
of $286,000 in calendar 1995. New locations established through acquisition
typically involve a lower cash investment, yet generate similar sales and
store contributions. Accordingly, acquisitions have historically produced
substantially greater returns on invested capital than new store construction.
The Company's expansion strategy is based primarily on acquisitions rather
than new store construction, although it will build new stores if judged to be
the most efficient means of entering a market. Because of the fragmented
nature of the industry, the Company has numerous opportunities to acquire
existing facilities and businesses and believes it can continue to make such
acquisitions on favorable financial terms.
RECREATIONAL BOATING INDUSTRY
The retail recreational boating industry represents a large and growing
industry in the United States as evidenced by the following data reported by
the National Marine Manufacturers Association (the "NMMA"):
.76.8 million people participated in recreational boating in 1995
.Total consumer expenditures related to recreational boating in 1995 were
approximately $17.3 billion
.Total boat and motor sales in 1995 were approximately $7.7 billion
. Estimated unit purchases of outboard, inboard/outboard and stern drive
pleasure boats increased 20.8% from 279,000 in 1991 to 337,000 units in
1995
24
<PAGE>
Demographics continue to be a key aspect of growth. The 35-54 age group,
which is the fastest growing segment of the U.S. population, is the largest
age category purchasing boats. This age group is projected to increase at a
2.5% annual rate through the end of the century, while other age categories
are projected to remain flat. Although these individuals account for 36% of
the U.S. population over age 16, they account for over 50% of discretionary
income.
The Company's management believes that the southern United States is a
particularly strong market for its products due to mild weather conditions,
extended fishing and recreational seasons and accessibility to the Gulf of
Mexico and numerous lakes, rivers, estuaries and wetlands. Boat registrations
in these markets reflect sales of products in average price ranges similar to
those offered by the Company, including outboard powered recreational boat
packages with average retail values of approximately $12,000 and
inboard/outboard runabouts with average retail values of approximately
$21,000. As reported by the NMMA, the Company's targeted 17-state market
accounted for over 57% of coastal shoreline in the continental U.S. and 43% of
inland water in square miles. Furthermore, on average this target market is
characterized by higher rates of boat ownership, with one boat owner for every
22 individuals versus the U.S. average of one for every 31 individuals,
representing 40.6% of total recreational boats registered in the U.S.
BUSINESS STRATEGY
Management of the Company believes it is the first to have developed a
multi-state, chain superstore merchandising strategy in the recreational
boating business. The Company's objective is to become the dominant retailer
of recreational boats, motors, trailers and marine accessories in the southern
United States. Management's merchandising strategy is based on providing
customers with a comprehensive selection of quality, brand name boats and
boating products in a comfortable superstore environment. The Company intends
to continue to build brand identity by placing the Travis Edition name on
complete boating packages. Travis Boats has developed and implemented a
business strategy designed to increase its market penetration within both
existing and new market areas through a variety of advertising and promotional
events. The Company intends to emphasize the following key elements of its
business strategy:
Travis Boating Center superstore. Travis Boating Center superstores have a
distinctive and stylish trade dress accented with deep blue awnings, a
nautical neon building decoration, expansive glass storefronts and brightly
lit interiors. The stores range in size from 6,000 to 33,200 square feet and
average approximately 21,000 square feet. Each superstore presents customers
with a broad array of boats and over 9,000 parts and accessories in a clean,
well-stocked, air-conditioned shopping environment. All boats are typically
displayed fully rigged with motor, trailer and a complete accessory package,
giving a "ready to take home" impression. Professionally-trained mechanics
operate service bays, providing customers with quality and reliable
maintenance and repair service.
Travis Edition concept. The Company uses extensive market research, combined
with the design resources of its manufacturers, to develop custom Travis
Edition boating packages. The Company's significant purchasing power and
consequent ability to coordinate designs with manufacturers have enabled the
Company to obtain products directly from the factory at the lowest prices and
with favorable delivery schedules. The Company can also add certain additional
features after receipt of the product to enhance the Company's Travis Edition
packages. Each Travis Edition is a complete, full-feature package, including
the boat, motor, trailer and numerous additional accessories and design
features often not found on competitors' products, thus providing customers
with superior value. In addition, Travis Edition boats are identified by the
Company's attractive private label logo as well as the respective
manufacturer's logo.
Unlike most recreational boat dealers, the Company establishes firm prices
on its Travis Edition packages and generally maintains such prices for an
entire season. Prices are advertised and clearly posted so that the customer
receives the same price at any Travis Boating Center. The Company's selling
philosophy eliminates
25
<PAGE>
customer anxiety associated with bargaining or negotiation and results in a
price at or below prices generally available from competitors. The Company
believes this pricing strategy and low-pressure sales style provide the
customer with the comfort and confidence of having received a better boat with
more features at a lower price. In the Company's view, this approach has
promoted good customer relationships and enhanced the Company's reputation in
the industry as a leading provider of quality and value.
Advertising and promotion. Due to the Company's relative size, the Company
has a competitive advantage within its industry in being able to conduct an
organized and systematic advertising and marketing effort. The Company promotes
its signature Travis Edition boat packages through full-color informational
brochures and through professionally developed advertising used in magazine,
newspaper, television and radio campaigns, targeting customers on a Company-
wide, state-wide or local basis. In certain magazines, the Company purchases
gate-fold cover, multi-page advertising space to promote its Travis Edition
product line in a catalog format. To enhance statewide and regional exposure,
the Company also actively sponsors numerous professional fishing guides and
fishing tournaments. These advertising techniques have permitted the Company to
attain mass market exposure that management believes would not be cost
effective to a boat dealer operating a single or small store network.
Substantial financial assistance in certain forms of general advertising is
received from manufacturers.
The Company also participates in boat shows, typically held in January and
February, in each of its markets and in certain markets of close proximity.
These shows are normally held at convention centers, with all area dealers
purchasing space in which to participate. Boat shows and other offsite
promotions generate a significant amount of interest in products and often have
an immediate impact on sales at a nominal incremental cost. Although total boat
show sales are difficult to assess, management attributes a significant portion
of second quarter net sales to such shows.
The Company implements numerous in-store promotions, including open houses
and seminars featuring experts discussing topics ranging from boating safety to
the latest competitive kneeboarding techniques. The Company also participates
in offsite sales promotions such as boat shows, in-the-water sales events on
area lakes and various types of parking lot shows in conjunction with large
retailers, including Sam's Clubs. In certain markets, the Company holds "Demo
Days," events that showcase boats in the water and allow customers actually to
operate and test-drive a variety of boats before selecting the package of their
choice.
GROWTH STRATEGY
The Company believes it is the first organization in the retail recreational
boat industry to operate a multi-state retail store network in an effort to
realize economies of scale from consolidation in this fragmented industry.
Continued expansion into new states adds to the Company's geographic diversity,
lessening the impact of economic cycles or weather patterns in individual
regions. Furthermore, expansion into several contiguous markets enables the
Company to readily shift individual boats from store-to-store to fill customer
orders when necessary. Management has developed databases to forecast market
trends by studying information obtained from state and local government
agencies and manufacturers and from discussions with other retailers and
employees of the Company.
The Company's superstore concept, Travis Edition packaging and pricing
practices, combined with the Company's enhanced internal systems and management
controls, establish a framework for continued expansion in multiple states.
Since October 1991, Travis Boats has opened or acquired seven stores in new
markets, and its current expansion strategy focuses beyond its existing
presence in Texas, Arkansas and Louisiana, into most other southern states. At
this time the Company has targeted Alabama, Arizona, Florida, Georgia, Kansas,
Kentucky, Mississippi, Missouri, New Mexico, North Carolina, Oklahoma, South
Carolina, Tennessee and Virginia as potential new-entry markets. The close
proximity of current and anticipated new markets facilitates operating and
distribution efficiencies within the Company's overall business.
26
<PAGE>
To further achieve its goal of becoming the dominant retailer of
recreational boats throughout the southern United States, the Company intends
to continue establishing new Travis Boating Center locations by (i) acquiring
existing boat retailers, (ii) acquiring and converting compatible facilities
and (iii) building new stores. The factors considered by the Company in
assessing a potential acquisition are the quality of the market, the
attractiveness of the location, price and the Company's ability to retain
qualified employees. In identifying new locations for expansion, the primary
focus of the Company is a prospective market's historic and projected level of
new boat registrations. The Company prefers that the boat retailer liquidate
inventory prior to the effective date of the acquisition, allowing the Company
to control inventory quality and immediately to merchandise its Travis Edition
boating packages and institute its value pricing philosophy.
The Company generally seeks expansion in new markets where the establishment
of a facility can immediately and substantially enhance the Company's market
share as well as its name recognition. It has accomplished this through the
development of its prototype superstore boating center. In strategic market
areas, the Company has built new facilities that have set the standard for its
image and operations. The Company has also acquired existing retailers and
facilities which it has converted to Company specifications. While newly built
stores provide design and location flexibility with attractive returns, the
Company's emphasis is to expand through the acquisition of existing
facilities, which yield higher returns on capital than can be achieved through
new store construction. See "Risk Factors--Dependence Upon Expansion."
OPERATIONS
Purchasing. The Company is the largest volume buyer in the United States of
Johnson outboard motors from Outboard Marine Corporation ("OMC") and is the
largest domestic volume buyer of boats from substantially all of the boat
manufacturers it represents. As a result, the Company has significant access
to the manufacturers and substantial input into the design process for the new
boats that are introduced to the market each year by such manufacturers. In
addition, the Company has designed and developed, in coordination with its
manufacturers, signature Travis Edition boating packages which account for the
vast majority of its total new boat sales. The Company's purchasing power
allows it to purchase boats that are pre-rigged for the Company's Travis
Edition lines. Approximately 27.0% of the Company's net purchases in 1995 were
from a single boat supplier.
The Company typically deals with each of its manufacturers pursuant to an
annually renewable, non-exclusive dealer agreement which does not contain any
contractual provisions concerning product pricing or purchasing levels.
Pricing is generally established on an annual basis, but may be changed at the
manufacturer's sole discretion. The Company's agreement with OMC, unlike its
other dealer agreements, is multi-year in nature. This agreement, which is in
the first of three years, sets forth an established discount level from the
then prevailing OMC dealer net price over the entire term of the agreement.
This dealer agreement may be canceled by either party if volume of product
purchased or available to be purchased is not maintained at pre-established
levels. OMC supplied products that represented approximately $11.8 million, or
28.5%, of the Company's net sales during fiscal 1995.
Pursuant to its arrangements with certain manufacturers, the Company's right
to display some product lines in certain markets may be restricted. While the
Company has received permission to sell Johnson motors and various boats in
its immediate expansion markets, it has not received such permission in its
broader target market. The Company does not believe that these restrictions
imposed by manufacturers will materially affect the Company's expansion plans.
See "Risk Factors--Limitations to Market Entry."
Store operations and management. Each Travis Boating Center superstore is
managed by a general manager who oversees the operations, personnel and
financial performance of the individual store, subject to the direction of the
Company's corporate office. To date, the Company has been successful in
recruiting and retaining general managers, with only one general manager
resigning since 1990. To increase loyalty and service, the Company encourages
general managers to purchase stock in the Company beginning with the
completion of their first year of service. The store is also typically staffed
by approximately three sales representatives, one
27
<PAGE>
finance manager, two parts employees, eight service related and make ready
employees and an office manager. Each store maintains an individual point of
sale and inventory tracking system which can be accessed through modems by
other stores and by the Company's corporate office. The Company is currently
replacing its inventory management and financial accounting system with an
updated, fully-integrated system in each of its stores. As of the date of this
Prospectus, the new system is operating in nine stores, including the
Company's Austin headquarters, with plans for the system to be fully
operational in all stores in fiscal 1997. The sales staff of each store is
compensated on a commission basis. Store managers are salaried employees with
incentive bonuses based on their store's performance. Parts managers and
service managers are compensated primarily on a salary basis with commission
incentives. In the past, the Company has not laid off employees during the
slow winter months.
Customer service and support. The Company strives to differentiate itself
further from competitors by providing customer service and support before,
during and after the sale. The sales process begins with the Company's ability
to offer customers a turn-key purchasing process by offering attractive lender
financing packages, extended service agreements, credit life, accidental and
health insurance and casualty insurance. The Company thoroughly instructs
customers about the operation of their boats and, whenever practical,
accompanies the customer to an area lake for a hands-on demonstration.
Subsequent to the delivery, customers are encouraged to bring in their boats
for regular service and maintenance by the Company's factory-trained service
personnel.
Management information systems. The Company has developed and maintained
management information systems and databases to monitor market conditions and
assess product and expansion strategies. Information received from state and
regulatory agencies, manufacturers and industry contacts allows the Company to
determine market share statistics and gross volume sales numbers on its
products as well as those of competitors. This information impacts ongoing
operations by allowing the Company to remain abreast of major or subtle
changes within the market and allows management to react accordingly by
realigning product lines and by adding new product lines and models.
The Company also utilizes the information assimilated from its management
information systems to determine and monitor the appropriate inventory level
at each store location throughout the selling season. When selecting new
markets for entry, the Company also undertakes a methodical market analysis
beginning with extensive on site observation, discussions with manufacturers
currently serving the area, and often discussions with local competitive
dealers. Further market research is conducted from a review of demographic and
other historical data on the number and type of boats annually registered or
newly licensed with appropriate local and state agencies. The Company has
developed data bases and programs that permit the prompt retrieval of data
used by management to evaluate the Company's expansion decisions.
Distribution and inventory management. The Company maintains a close
geographic proximity between stores that it operates and stores that it plans
to open. This allows for timely and cost-effective sharing of managerial and
sales responsibilities and the transfer of individual boats among stores to
fill customer orders. The Company strives to locate new stores within a 250
mile radius of an existing store to facilitate the prompt transfer of
inventory that otherwise might take three to four weeks to order from the
manufacturer. This reduces delays in delivery and helps the Company maximize
inventory turnover. It also assists in controlling the potential of overstock
or understock situations. The Company plans to maintain a similar geographic
radius in future expansion plans, although there may be instances in which it
will not be advantageous to do so.
Floor plan financing. The Company acquires a substantial portion of its
inventory through floor plan financing agreements. Inventory is generally
purchased under floor plan lines of credit (secured by such inventory)
maintained with third party finance companies and/or commercial banks,
depending upon the type of product purchased. The finance companies maintain
relationships with certain manufacturers that allow the Company to obtain
several months of interest-free financing, generally from August of one year
to May of the following year. Management believes that these financing
arrangements are standard within the industry. As of
28
<PAGE>
March 31, 1996, the Company and its subsidiaries owed an aggregate of $24.2
million pursuant to the floor plan financing agreements. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Liquidity and Capital Resources."
Sales of used boats. The Company's primary sales focus is on the retail sale
of new boat, motor and trailer packages. To facilitate new product sales, the
Company will accept a prospective customer's used boat for sale on consignment
or as a trade-in. In evaluating trades, the Company generally offers trade
allowances at or below the published wholesale cost to allow for the immediate
sale of the used product to certain wholesalers with which it regularly
conducts business. Accordingly, used product inventory and sales are typically
insignificant in relation to those of new products.
Employees. As of March 31, 1996, the Company's staff consisted of 250
employees, 241 of whom are full time. The full-time employees include 12 in
store level management and 18 in corporate administration and management. The
Company is not a party to any collective bargaining agreements and is not
aware of any efforts to unionize its employees. The Company considers its
relations with its employees to be good.
Trademarks and service marks. The Company does not hold any registered trade
or service marks at this time, but has trademark applications pending with the
U.S. Patent and Trademark Office for the names "Travis Boating Center" and
"Travis Edition," for its corporate logo and for the overall appearance and
trade dress of its Travis Boating Centers. There can be no assurance that any
of these applications will be granted. However, based on a number of years of
use, the Company believes it has common law rights to these marks at least in
its current market areas.
SEASONALITY
The Company's business, as well as the entire recreational boating industry,
is highly seasonal. Strong sales typically begin in January with the onset of
the public boat and recreation shows, and continue through July. Over the
previous five-year period, the average net sales for the quarters ended March
31 and June 30 represented in excess of 27% and 37%, respectively, of the
Company's annual net sales. The Company generally realizes significantly lower
sales in the quarterly period ended December 31, resulting in operating losses
during that quarter. The Company uses seasonality and its stronger capital
position to take product delivery during the manufacturers' slow seasons and
to gain pricing advantages and better product availability during the selling
season.
The Company's business is also significantly affected by weather patterns
which may adversely affect the Company's results of operations. For example,
drought conditions or merely reduced rainfall levels, as well as excessive
rain, may force area lakes to close or render boating dangerous or
inconvenient, thereby curtailing customer demand for the Company's products.
In addition, unseasonably cool weather and prolonged winter conditions may
lead to a shorter selling season in certain locations. Although the Company's
geographic expansion has reduced, and is expected to continue to reduce, the
overall impact to the Company of adverse weather conditions in any one market
area, such conditions will continue to represent potential, material adverse
risks to the Company and its future financial performance. See "Risk Factors--
Impact of Seasonality and Weather on Operations."
ENVIRONMENTAL AND OTHER REGULATORY ISSUES
On October 31, 1994, the U.S. Environmental Protection Agency (the "EPA")
announced proposed emissions regulations for outboard marine engines. The
proposed regulations would require a 75% average reduction in hydrocarbon
emissions for outboard motors and set standards for carbon monoxide and
nitrogen oxide emissions as well. Under the proposed regulations,
manufacturers would begin phasing in low emission models in 1998 and have nine
years to achieve full compliance. Costs of these new models, if materially
different than previous comparable horsepower models, and/or the
manufacturer's inability to comply with the EPA requirements, could have a
material adverse effect on the Company's business, financial condition and
results of operations. As of the date of this Prospectus, the EPA has not yet
finalized these regulations. The EPA estimates
29
<PAGE>
that sales of outboard motors will be adversely affected by price increases
that will result from this rulemaking. The Company's outboard motor
manufacturer currently meets all common standards and has licensed technology
to meet or exceed EPA standards with a new line of motors.
The Company, in the ordinary course of its business, is required to dispose
of certain waste products that are regulated by state or federal agencies.
These products include waste motor oil, tires, batteries and certain paints.
It is the Company's policy to use appropriately licensed waste disposal firms
to handle this refuse. If there were improper disposal of these products, it
could result in potential liability to the Company. Although the Company does
not own or operate any underground petroleum storage tanks, it currently
maintains certain above-ground tanks which are subject to registration,
testing and governmental regulation.
Additionally, certain states have required or are considering requiring a
license in order to operate a recreational boat. While the licensing
requirements are not expected to be unduly restrictive, such regulations may
discourage potential first-time buyers thereby limiting future sales. The
adoption of such licensing regulations could have a material adverse impact on
the Company's business. See "Risk Factors--Impact of Environmental and Other
Regulatory Issues."
PRODUCT LIABILITY
Products sold or serviced by the Company may expose it to potential
liabilities for personal injury or property damage claims relating to the use
of those products. Additionally, as a result of the Company's activities in
custom packaging its Travis Edition lines, the Company may become a target of
product liability claims relating to defects in manufacture or design.
Historically, the resolution of product liability claims has not materially
affected the Company's business. The Company generally requires manufacturers
from which it purchases products to supply proof of product liability
insurance, and the Company maintains third-party product liability insurance,
which it believes to be adequate. However, there can be no assurance that the
Company will not experience legal claims in excess of its insurance coverage,
or claims that are ultimately not covered by insurance. Furthermore, if any
significant claims are made against the Company, the Company's business,
financial condition and results of operations may be adversely affected by
related negative publicity. See "Risk Factors--Product and Service Liability
Risks."
COMPETITION
The Company operates in a highly competitive environment. In addition to
facing competition generally from businesses seeking to attract discretionary
spending dollars, the recreational boat industry itself is highly fragmented,
resulting in intense competition for customers, access to quality products,
access to boat show space in new markets and suitable store locations. The
Company believes that the principal factors influencing competition are price,
location, selection, service and the availability of F&I Products. The Company
relies heavily on boat shows to generate sales. If the Company is impeded in
its ability to participate in boat shows in its existing or targeted markets,
it could have a material adverse effect on the Company's business, financial
condition and results of operations.
The Company competes primarily with single location boat dealers and, to a
lesser degree, with national specialty marine stores, catalog retailers,
sporting goods stores and mass merchants, particularly with respect to parts
and accessories. Dealer competition continues to increase based on the quality
of available products, the price and value of the products and attention to
customer service. There is significant competition both within markets
currently being served by the Company and in new markets into which the
Company plans to enter. The Company competes in each of its markets with
retailers of brands of boats and motors not sold by the Company in that
market. Management believes that a trend in the industry is for manufacturers
to include more features as standard equipment on boats and for dealers to
offer packages comparable to those now offered by the Company as its Travis
Edition lines. In addition, several of the Company's competitors, especially
those selling boating accessories, are large national or regional chains that
have substantially greater financial, marketing and other resources than the
Company. There can be no assurance that the Company will be able to compete
successfully in the retail marine industry in the future. See "Risk Factors--
Competition."
30
<PAGE>
PROPERTIES
The Company owns its corporate offices located in the Travis Boating Center
in Austin, Texas. The Company also owns and operates Travis Boating Center
locations in Abilene, Dallas, Midland and San Antonio, Texas; Baton Rouge,
Louisiana; and Hot Springs, Arkansas. The remaining facilities are leased
under short-term leases that generally contain multi-year renewal options. In
all such cases, the Company pays a fixed rent. In substantially all of the
leased locations, the Company is responsible for taxes, insurance, repairs and
maintenance.
The chart below reflects the status and approximate size of the various
Travis Boating Centers operated as of the date of this Prospectus.
<TABLE>
<CAPTION>
OWNED OR
LOCATION SQUARE FOOTAGE* ACREAGE* LEASED YEAR OF MARKET ENTRY
-------- --------------- -------- -------- --------------------
<S> <C> <C> <C> <C>
Austin, Texas(1)........ 20,000 3.5 Owned 1979
San Antonio, Texas(2)... 15,500 1.9 Owned 1982
Midland, Texas(2)....... 18,750 3.8 Owned 1982
Dallas, Texas(1)........ 20,000 4.2 Owned 1983
Abilene, Texas(2)....... 24,250 3.7 Owned 1989
Houston, Texas(2)....... 15,100 2.2 Leased 1991
Baton Rouge, Louisian-
a(2)................... 33,200 7.5 Owned 1992
Beaumont, Texas(2)...... 25,500 6.5 Leased 1994
Arlington, Texas(4)..... 6,000 1.0 Leased 1995
Heber Springs, Arkan-
sas(3)................. 26,000 9.0 Leased 1995
Hot Springs, Arkan-
sas(3)................. 20,510 3.0 Owned 1995
New Iberia, Louisian-
a(3)................... 24,000 3.3 Leased 1995
</TABLE>
- --------
* Square footage and acreage are approximate.
(1) Newly constructed superstore.
(2) Acquired facility remodeled to superstore standards.
(3) Acquired facility to be remodeled to superstore standards.
(4) To be moved to newly constructed superstore under long-term lease.
LEGAL PROCEEDINGS
The Company is not a party to any material legal proceedings. The Company
is, however, involved in various legal proceedings arising out of its
operations in the ordinary course of business. The Company believes that the
outcome of all such proceedings, even if determined adversely, would not have
a material adverse effect on its business, financial condition or results of
operations.
31
<PAGE>
MANAGEMENT
DIRECTORS, DIRECTOR NOMINEES AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to each
director, each person who has agreed to serve as a director, and each
executive officer of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Mark T. Walton(1)(2).... 44 Chairman of the Board and President
Ronnie L. Spradling(1).. 52 Executive Vice President--New Store Development and Director
Michael B. Perrine...... 32 Chief Financial Officer, Treasurer and Secretary
E.D. Bohls(1)(2)........ 77 Vice Chairman of the Board
Joseph E.
Simpson(1)(2)(3)....... 62 Director
Robert C.
Siddons(1)(2)(4)....... 53 Director
Steve Gurasich(3)(4).... 47 Director Nominee
Zach McClendon,
Jr. (3)(4)............. 58 Director Nominee
</TABLE>
- --------
(1) Member of the Nominations Committee.
(2) Member of the Executive Committee.
(3) Member or nominee to the Audit Committee.
(4) Member or nominee to the Compensation Committee.
Mark T. Walton has served as President and as a director of the Company
since 1980 and as Chairman of the Board since 1995. From 1979 to 1980, Mr.
Walton served as the General Manager of the Company's Austin store. Utilizing
his 25 years of experience in the retail boat business, Mr. Walton, together
with Mr. Spradling, developed and implemented the Travis Edition and Travis
Boating Center concepts.
Ronnie L. Spradling has served as Executive Vice President of the Company
since 1989 and as the Executive Vice President of New Store Development since
1994. Mr. Spradling became a director in 1995. Mr. Spradling previously served
as the General Manager of Falcon Marine, Inc., located in Midland, Texas from
1982 to 1988. Mr. Spradling has over 28 years of experience in boat retailing
operations. Together with Mr. Walton, Mr. Spradling helped develop and
implement the Travis Boating Center and Travis Edition concepts.
Michael B. Perrine has served as Chief Financial Officer since 1991 and as
Treasurer and Secretary of the Company since 1992. From 1986 to 1991, he
served as a loan officer in the Commercial Banking Division of NationsBank,
N.A. Mr. Perrine is responsible for developing and implementing the Company's
corporate structure.
E.D. Bohls has served as the Vice Chairman of the Board of the Company since
1995 and previously served as Chairman of the Board of Directors of the
Company from 1979 to 1995. He has served as Chairman of the Board of Directors
of Capital Commerce Reporter, Inc., a public records research company, since
1986. In addition, he has served as Vice President and as a director of
Americana Enterprises, a private real estate development joint venture, since
1975.
Joseph E. Simpson has served as a director of the Company since 1979. He has
served as President and as a director of Capital Commerce Reporter, Inc., a
records research company, since 1986.
Robert C. Siddons has served as a director of the Company since 1979. He has
served as President of Frank Siddons Insurance Agency, a family-owned
insurance agency, since 1987. In addition, he has served as President of the
Texas Builders Insurance Company, a commercial lines insurance company, since
1987.
32
<PAGE>
Steve Gurasich has agreed to serve as a director of the Company upon the
closing of the offering. For over the past 20 years, Mr. Gurasich has served
in various capacities, including most recently as Chairman of the Board of
Directors of GSD&M Advertising, Austin, Texas, an advertising firm, handling
such accounts as Southwest Airlines, Wal-Mart, MasterCard, Coors Light and
Pearle Vision.
Zach McClendon, Jr. has agreed to serve as a director of the Company upon
the closing of the offering. Mr. McClendon is the co-founder of the
predecessor to SeaArc Marine, Inc., a manufacturer of various types of boats
and marine products, and now serves as the Chairman of the Board of its parent
company. In addition, Mr. McClendon serves as the Chairman of the Board of
Union Bank and Trust Company, a subsidiary of First Union Financial
Corporation, and as Chairman of the Board of Directors of Drew Cottonseed Oil
Mill, Inc., a manufacturer of polystyrene products.
Officers are elected annually by, and serve at the discretion of, the Board
of Directors.
The number of directors of the Board of Directors is currently fixed at
seven. The Board of Directors is divided into three classes, designated as
Class A, Class B and Class C. The members of each class of directors will
serve for staggered three-year terms. Messrs. Bohls and Simpson are currently
Class A directors and will stand for election at the 1996 annual stockholders'
meeting. Mr. Spradling is currently a Class B director and will stand for
election at the 1997 annual stockholders' meeting. Messrs. Walton and Siddons
are currently Class C directors and will stand for election at the 1998 annual
stockholders' meeting. There are currently two Class B positions on the Board
of Directors that are vacant.
EXECUTIVE COMPENSATION
The following table sets forth certain information with respect to the
compensation awarded to, earned by or paid for services rendered to the
Company in all capacities during the fiscal year ended September 30, 1995, by
the Company's President and the other most highly compensated executive
officer who received compensation in excess of $100,000 for the fiscal year
ended September 30, 1995 (collectively, the "named executive officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION(1) COMPENSATION
----------------------------- ------------
SECURITIES
OTHER ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION SALARY BONUS COMPENSATION OPTIONS
- --------------------------- -------- ------- ------------ ------------
<S> <C> <C> <C> <C>
Mark T. Walton....................... $108,000 $45,000 -- 20,267
President
Ronnie L. Spradling.................. $ 69,000 $45,000 -- 46,933
Executive Vice President
</TABLE>
- --------
(1) Fiscal year 1995 is a nine-month period; dollar amounts shown have been
annualized.
33
<PAGE>
OPTIONS GRANTED IN LAST FISCAL YEAR
The following table sets forth information concerning stock options granted
by the Company to the named executive officers during the fiscal year ended
September 30, 1995.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF STOCK
SECURITIES % OF TOTAL PRICE APPRECIATION FOR
UNDERLYING OPTIONS GRANTED EXERCISE OPTION TERM(2)
OPTIONS TO EMPLOYEES IN PRICE EXPIRATION -----------------------
NAME GRANTED(1) FISCAL YEAR ($/SHARE) DATE 5% 10%
---- ---------- --------------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Mark T. Walton.......... 20,267 15.1% $5.25 May 2005 $ 66,914 $ 169,574
Ronnie L. Spradling..... 46,933 35.1% $5.25 May 2005 $ 154,960 $ 392,698
</TABLE>
- --------
(1) The stock options were granted by the Company pursuant to Nonqualified
Stock Option Agreements dated May 17, 1995. These options become
exercisable as to 20% of the shares covered thereby on May 17 of each year
with the first installment vesting on May 17, 1996.
(2) These amounts are calculated based on certain assumed rates of annual
compound stock price appreciation from the date the option was granted to
the end of the option term. Actual gains, if any, on stock option
exercises and Common Stock holdings are dependent on the future
performance of the Common Stock and overall stock market conditions. There
can be no assurance that the amounts reflected in this table will be
achieved. These calculations assume a fair market value of $5.25 per share
of Common Stock on May 17, 1995, the date of grant of such options.
STOCK OPTION PLANS AND AGREEMENTS
The Company is currently a party to certain option agreements ("Option
Agreements") pursuant to which options to purchase shares of the Common Stock
are outstanding. Additionally, the Company currently maintains one plan, the
Incentive Stock Plan, pursuant to which options, stock appreciation rights and
restricted stock are available for future grant.
Nonqualified Stock Option Agreements. Pursuant to the Option Agreements,
each of Messrs. Walton, Spradling and Perrine (together, the "Optionees")
received nonqualified stock options to purchase 20,267, 46,933 and 66,667
shares of Common Stock, respectively, at a price of $5.25 per share
exercisable for a period of ten years. These options become exercisable as to
20% of the shares covered thereby on May 17 of each year (the "Vesting Date")
with the first installment vesting on May 17, 1996.
In the event the employment of an Optionee is terminated for "cause," as
defined in the Option Agreement, the Optionee shall have the right to exercise
any vested, unexercised portion of the Option. If an Optionee is terminated
without "cause," the options shall immediately become fully vested and
exercisable. Upon the occurrence of a "change in control" of Travis Boats, as
defined in the Option Agreements, the options shall immediately become fully
vested and exercisable.
Incentive Stock Plan. The Company's Incentive Stock Plan was adopted by the
Board of Directors and approved by the Company's stockholders in December
1995. A total of 200,000 shares of Common Stock have been reserved for
issuance pursuant to the Incentive Stock Plan. To date, no options have been
granted under this plan. The Incentive Stock Plan provides for the grant to
employees, including officers of the Company, of "incentive stock options"
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), nonstatutory stock options, stock appreciation rights
and restricted stock (collectively, "Awards"). In addition, non-employee
directors ("Outside Directors") and consultants are eligible to receive
nonstatutory stock options.
The Incentive Stock Plan provides that Awards may be granted to employees
(including officers), consultants and directors of the Company and its
majority-owned subsidiaries. To the extent that the aggregate
34
<PAGE>
fair market value of the shares with respect to which options designated as
"incentive stock options" are exercisable for the first time by any optionee
during any calendar year (under all plans of the Company) exceeds $100,000,
such options will be reclassified in accordance with the Code. The Incentive
Stock Plan is not a qualified deferred compensation plan under Section 401(a)
of the Code and is not subject to the provisions of the Employee Retirement
Income Security Act of 1974, as amended.
The Incentive Stock Plan is currently administered by the Compensation
Committee of the Board. Subject to special provisions relating to Outside
Directors, the Board of Directors or its designated committee selects the
employees to which Awards may be granted and the type of Award to be granted
and determines, as applicable, the number of shares to be subject to each
Award, the exercise price and terms of vesting. In making such determination,
the Board of Directors or its designated committee takes into account the
employee's present and potential contributions to the success of the Company
and other relevant factors.
Stock Options. The exercise price of all incentive stock options granted
under the Incentive Stock Plan must be at least equal to the fair market value
of the shares of Common Stock on the date of grant. With respect to any
participant who owns stock representing more than 10% of the voting rights of
the Company's outstanding capital stock, the exercise price of any incentive
stock option granted under the Incentive Stock Plan must equal at least 110%
of the fair market value of the shares of Common Stock subject to such option
on the date of grant and the term of the option must not exceed five years.
Options granted under the Incentive Stock Plan vest pursuant to terms
determined by the Board of Directors or its designated committee.
The terms of all incentive stock options and nonstatutory stock options
granted under the Incentive Stock Plan may not exceed ten years and ten years
and 30 days, respectively. However, the terms of all incentive stock options
granted to an optionee who, at the time of grant, owns stock representing more
than 10% of the voting rights of the of the Company's outstanding capital
stock, may not exceed five years.
Outside Directors' Options. Options may be granted to Outside Directors
under the Incentive Stock Plan only pursuant to an automatic, nondiscretionary
grant mechanism, under which each Outside Director whose term begins after the
closing of this offering will receive an option to acquire 13,333 shares of
Common Stock, exercisable at fair market value on the date of grant and
vesting in five equal annual installments beginning on the first anniversary
of the Outside Director's term in office. The term of the option shall be ten
years; provided that vested options shall be exercisable only while the
Outside Director remains a director, or within one month after termination of
his status as an Outside Director.
Restricted Stock Awards. Restricted Common Stock ("Restricted Stock") may be
granted to employees pursuant to terms determined by the Board of Directors or
its designated committee. Restricted Stock may not be transferred until the
restrictions are removed or have expired. Conditions to the removal of
restrictions may include, but are not required to be limited to, continuing
employment or service to the Company or achievement of certain performance
objectives.
Stock Appreciation Rights. Stock appreciation rights ("SARs") may be granted
to employees, either independent of, or in connection with, options. SARs are
exercisable in the manner, and pursuant to terms, determined by the Board of
Directors or its designated committee. Terms to be determined by the Board of
Directors (or its designated committee) include the number of shares to which
the SAR applies, the vesting schedule for the exercise of such right and the
expiration date of the right. Upon exercise of an SAR, the holder shall
receive payment (in cash, stock or a combination of both at the discretion of
the Board of Directors or its designated committee) in an amount equal to the
product of (i) the fair market value of a share of Common Stock as of the date
of exercise, minus the fair market value of a share of Common Stock as of the
date the SAR was granted, multiplied by (ii) the number of shares as to which
the SAR is being exercised. The exercise of SARs granted in connection with
options requires the holder to surrender the related option (or any portion
thereof, to the extent unexercised). No SAR granted under the Incentive Stock
Plan is transferable by the
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<PAGE>
employee other than by will or the laws of descent and distribution and each
SAR is exercisable during the lifetime of the employee only by such employee.
Adjustment Upon Changes in Capitalization. In the event of certain changes
in the Company's capitalization, including as a result of a stock split or
stock dividend, which results in a greater or lesser number of shares of
outstanding Common Stock, appropriate adjustment shall be made in the number
of shares available under the Incentive Stock Plan, the exercise price and in
the number of shares subject to options, Restricted Stock and SARs.
Adjustments Upon Change in Control. Award agreements under the Incentive
Stock Plan may, as determined by the Board of Directors or its designated
Committee, provide that, in the event of a "change in control" of the Company,
the following will occur: the holder of a stock option will be granted a
corresponding stock appreciation right; all outstanding stock appreciation
rights and stock options will become immediately and fully vested and
exercisable in full; and the restriction period on any Restricted Stock will
be accelerated and the restrictions will expire. In general, a "change in
control" of the Company occurs in any of five situations: (1) a person other
than (a) the Company, (b) certain affiliated companies or benefit plans, or
(c) a company, a majority of which is owned directly or indirectly by the
stockholders of the Company, becomes the beneficial owner of 50% or more of
the voting power of the Company's outstanding voting securities; (2) a
majority of the Board of Directors is not comprised of the members of the
Board of Directors at the effective date of the Incentive Stock Plan and
persons whose elections as directors were approved by those original directors
or their approved successors; (3) a person described in clause (1) announces a
tender offer for 50% or more of the Company's outstanding voting securities
and the Board of Directors approves or does not oppose the tender offer; (4)
the Company merges or consolidates with another corporation or partnership, or
the Company's stockholders approve such a merger or consolidation, other than
mergers or consolidations in which the Company's voting securities are
converted into securities having the majority of voting power in the surviving
company; or (5) the Company liquidates or sells all or substantially all of
its assets, or the Company's stockholders approve such a liquidation or sale,
except sales to corporations having substantially the same ownership as the
Company.
If a "restructuring" of the Company occurs that does not constitute a change
in control of the Company, the Board of Directors or the committee
administering the Incentive Stock Plan may (but need not) cause the Company to
take any one or more of the following actions: accelerate in whole or in part
the time of vesting and exercisability of any outstanding stock options and
stock appreciation rights to permit those stock options and stock appreciation
rights to be exercisable before, upon, or after the completion of the
restructure; grant each option holder corresponding stock appreciation rights;
accelerate in whole or in part the expiration of some or all of the
restrictions on any Restricted Stock; if the restructuring involves a
transaction in which the Company is not the surviving entity, cause the
surviving entity to assume in whole or in part any one or more of the
outstanding incentive awards upon such terms and provisions as the Board of
Directors or its designated committee deems desirable; or redeem in whole or
in part any one or more of the outstanding incentive awards (whether or not
then exercisable) in consideration of a cash payment as adjusted for
withholding obligations. A restructuring generally is any merger of the
Company or the direct or indirect transfer of all or substantially all of the
Company's assets (whether by sale, merger, consolidation, liquidation, or
otherwise) in one transaction or a series of transactions.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with TBC Management, Ltd.
and each of Mark T. Walton, Ronnie L. Spradling and Michael B. Perrine,
providing, among other things, for three-year terms and annual base salaries
of $175,000 for Mr. Walton, $150,000 for Mr. Spradling and $90,000 for Mr.
Perrine, respectively. In addition, Messrs. Walton, Spradling and Perrine have
agreed to contractual confidentiality and noncompete provisions in their
respective employment agreements, which will extend beyond termination of
their employment for any reason. In the event any such employees are
terminated without "cause," as such term is defined in the employee
agreements, such employees will be entitled to payment of approximately three
times
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<PAGE>
their annual salary. The foregoing agreements are scheduled to become
effective upon the completion of this offering.
The employment agreements also provide that, if the consolidated income of
Travis Boats before income tax expenses and non-recurring audit adjustments
(the "Pre-tax Income") reflects growth in excess of 20.0% over the previous
fiscal year, Messrs. Walton and Spradling will each receive a bonus of 2.0% of
the Pre-tax Income and Mr. Perrine will receive a bonus of 1.0% of the Pre-tax
Income. If the Pre-tax Income does not reflect growth of 20.0%, the bonus for
each individual will be determined by the Board of Directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Compensation decisions during fiscal year 1994 were made by the Company's
Board of Directors, which included Mark T. Walton, President of the Company.
In 1995, the Company established a Compensation Committee to review the
performance of executive officers, establish overall employee compensation
policies and recommend major compensation programs for approval by the Board
of Directors. No member of the current Compensation Committee serves as an
executive officer of the Company, or as a director of any entity, an executive
officer of which serves on the Compensation Committee or as a director of the
Company.
COMPENSATION OF DIRECTORS
During fiscal 1995, the Company paid directors' fees of $1,500 per month to
each director, whether or not such director was an officer or employee of the
Company. Effective immediately following the closing of this offering,
directors who are not officers or employees of or consultants to the Company
will receive annual compensation of $10,000, plus $2,000 per year for each
committee on which such director serves, excluding the Nominations Committee,
for which compensation will not be received, and $3,000 per year in the case
of the Executive Committee. Directors' expenses for attending meetings are
presently not reimbursed by the Company. Directors who are elected or
appointed after or upon the closing of this offering and who are not also
officers or employees of the Company will also receive options to purchase
Common Stock under the Incentive Stock Plan. See "--Stock Option Plans and
Agreements."
401(K) PROFIT SHARING PLAN
In January 1995, the Company adopted a 401(k) Plan (the "401(k) Plan") under
which substantially all employees of the Company and its subsidiaries who have
completed at least one year of service and attain the age of 21 are eligible
to participate, subject to certain other conditions. Eligible participants may
elect to defer the receipt of up to a maximum of 15.0% of their annual
compensation (up to a maximum dollar amount established in accordance with
Section 401(k) of the Code and have such deferred amounts contributed to the
401(k) Plan. The Company may, in its discretion, make matching contributions
which the Company, in its discretion, determines from year to year. The Board
of Directors has voted to make a matching contribution equal to 50.0% of the
first 4.0% of each eligible participant's 1995 calendar year contribution. The
expected amount of this contribution is approximately $25,000. Participants
are 100.0% vested in their contributions while employer- matching
contributions vest over a five year period.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Articles of Incorporation provide that the Company has the
power to indemnify any person to the fullest extent permitted by law. The
Company has entered into indemnification agreements with each of its directors
and executive officers providing the broadest indemnification allowable under
the Texas Business Corporation Act. See "Description of Capital Stock--
Indemnification of Officers and Directors; Limitation of Director Liability."
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<PAGE>
CERTAIN TRANSACTIONS
Stockholders Agreement. The shares of Common Stock are subject to
restrictions on transfer pursuant to a stock restriction agreement entered
into by the Company and all of the stockholders of the Company. The stock
restriction agreement prohibits the sale of Common Stock without first
offering such stock for sale to the other stockholders and the Company. This
agreement also provides that upon certain events, a stockholder shall sell,
and the Company shall purchase all of the stockholder's stock at a formula
price. The Company is currently prohibited from issuing stock to any
stockholder unless such stockholder first enters into the stock restriction
agreement. This agreement terminates automatically upon the consummation of
this offering.
Reinsurance Arrangements. The Company sells extended service contracts to
its customers. The obligations of the Company under these contracts are
transferred to Ideal Insurance Company, Ltd. ("Ideal") pursuant to an
agreement between the Company and Ideal dated as of January 1, 1994. Ideal
reinsures these risks with Amerisure Property & Casualty, Ltd. ("Amerisure"),
a company wholly owned by certain principal stockholders of the Company. These
contracts are administered by First Extended Service Corporation ("FESC") and
are reinsured under a stop-loss policy issued to Amerisure by FFG Insurance
Co. ("FFG"), an affiliate of FESC. In conjunction with these arrangements, the
Company pays an agreed amount for each extended service contract which is
insured and, in the event of claims under any extended service contracts,
Amerisure reimburses the repair facility for the amount of covered claims.
Amerisure and/or FFG are financially responsible for any repairs required
pursuant to the extended service contract. Upon consummation of this offering,
Amerisure will remain a separate legal entity and will maintain its current
ownership structure. However, to eliminate any potential conflict of interest,
the Company will terminate its relationship with Amerisure effective upon
consummation of the offering with respect to future extended service
contracts. The Company is evaluating whether to use traditional insurance, to
form a wholly owned subsidiary to provide the services previously provided by
FESC or to arrange an alternate method of insurance. To provide for the risks
associated with the extended service contracts sold by the Company prior to
the consummation of this offering, Amerisure intends to retain cash reserves
in an amount it believes will reasonably be adequate to cover any of
Amerisure's obligations. Moreover, Amerisure has obtained the above described
stop-loss policy from FFG. For the fiscal year ended December 31, 1994, and
for the fiscal year ended September 30, 1995, the Company received net
payments of approximately $350,000 and $448,000, respectively, through the
sale of extended service contracts. Over the same period, Amerisure received
an aggregate of approximately $700,000, all of which it has reserved against
losses with respect to extended service contracts sold to the Company's
customers. Amerisure's underwriting losses and aggregate reinsurance costs
will not be determinable until the end of each of the five-year extended
service contracts sold prior to this offering. The Company is not affiliated
with Ideal, FESC or FFG.
Employment Arrangements. Executive management, store management and
corporate administrative employees are employed by TBC Management, Ltd., a
Texas limited partnership (the "Partnership"). The Partnership, in turn, has
entered into a Management Agreement with the Company and its subsidiaries and
invoices each company monthly for management services rendered. The general
partner and 1.0% owner of the Partnership is the Company. The sole limited
partner and 99.0% owner is T B C Management, Inc. (the "Delaware Company"), a
Delaware company wholly owned by Travis Boats. The operations of the
Partnership are accounted for on a consolidated basis with those of the
Company. The Delaware Company's income results from distributions of the
Partnership and is accordingly taxed under Delaware law.
Certain Borrowings. On August 31, 1995, the Company borrowed $300,000 from
Amerisure. The Company executed a promissory note in favor of Amerisure for
the principal amount of $300,000, repayable at an interest rate of prime plus
0.25% per annum. The note has been paid in full.
The Company borrowed a total of $150,000 from Joseph E. and Pat Simpson.
Joseph E. Simpson is a director and principal stockholder of the Company. The
Company borrowed $100,000 on October 11, 1994 and executed an unsecured
promissory note for that amount. On January 31, 1995, the $100,000 note was
renewed and extended until January 1, 1996. On March 31, 1995, the Company
borrowed an additional $50,000 and executed a promissory note for that amount.
Both notes were renewed and extended into one $150,000 note on
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<PAGE>
August 31, 1995. The renewed and extended note provided for quarterly interest
payments at an interest rate equal to the prime rate minus 0.25%, with the
principal balance payable in full on October 1, 1996. The renewed and extended
note will be paid in full prior to the consummation of this offering.
The Company borrowed $175,000 from Capital Commerce Reporter, Inc., a company
owned by Joseph E. Simpson and E.D. Bohls, directors and principal stockholders
of the Company. The loan was evidenced by two unsecured promissory notes, for
$100,000 and $75,000. The notes were originally executed on August 10, 1994 and
were renewed and extended on December 31, 1994 and on August 31, 1995. The
renewed and extended notes provided for quarterly payments of interest only at
a rate equal to the prime rate minus 0.25%, with the principal balance payable
in full on October 1, 1996. The notes will be paid in full prior to the
consummation of this offering.
E.D. Bohls, Jesse Cox, Robert C. Siddons, Joseph E. Simpson, Ronnie L.
Spradling and Mark T. Walton, all of whom are stockholders and officers or
directors of the Company, have each executed a personal guaranty of certain
indebtedness of the Company. It is currently contemplated that such guaranties
will be released upon completion of this offering.
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<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth the beneficial ownership of the Common Stock
as of March 31, 1996, and as adjusted to reflect the sale of shares offered
hereby of (i) each person known to the Company to own beneficially 5% or more
of the Common Stock, (ii) each of the Company's directors, (iii) each of the
Company's named executive officers, (iv) each Selling Stockholder and (v) all
of the Company's executive officers and directors as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED BEFORE OWNED AFTER
THE OFFERING(1)(2) NUMBER OF THE OFFERING(3)
----------------------- SHARES ----------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT OFFERED NUMBER PERCENT
- ------------------------ ------------ ---------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C>
E.D. Bohls(4)........... 808,427 30.0% 97,800 710,627 17.8%
Robert C. Siddons(5).... 538,968 20.0 94,900 444,068 11.1
Mark T. Walton(6)....... 411,521 15.0 40,000 371,521 9.3
Joseph E. Simpson....... 404,224 15.0 72,700 331,524 8.3
Ronnie L. Spradling(7).. 267,030 10.0 25,000 242,030 6.1
James Bohls(8).......... 252,928 9.0 43,700 209,228 5.2
Jesse C. Cox(9)......... 202,112 8.0 43,700 158,412 4.0
Blake Bohls(10)......... 25,408 * 8,000 17,408 *
Mason Bohls(11)......... 25,408 * 8,000 17,408 *
Kelly Harber............ 8,534 * 500 8,004 *
Michael B. Perrine(12).. 20,800 * 0 20,800 *
J. Brooks Rainer........ 6,400 * 800 5,600 *
Charles Bell............ 9,878 * 800 9,078 *
William M. Breed........ 11,691 * 1,600 10,091 *
All executive officers
and directors
as a group (six
persons)(13)........... 2,450,970 92% 330,400 2,120,570 53.06%
</TABLE>
- -------
* Less than 1%.
(1) Except as otherwise indicated, the persons named in the table have sole
voting and investment power with respect to the shares of Common Stock
shown as beneficially owned by them. Beneficial ownership as reported in
the above table has been determined in accordance with Rule 13d-3 under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
based on information furnished by the persons listed, and represents the
number of shares of Common Stock for which a person, directly or
indirectly, through any contract, management, understanding, relationship
or otherwise, has or shares voting power, including the power to vote or
direct the voting of such shares, or investment power, including the
power to dispose or to direct the disposition of such shares, and
includes shares which may be acquired upon the exercise of options within
60 days following June 24, 1996, which is the assumed effective date of
this offering. The percentages are based upon 2,683,506 shares
outstanding as of the date of this Prospectus, and 3,996,506 shares
outstanding after giving effect to this offering. Except as otherwise
noted below, the address of each holder of 5% or more of the Common Stock
is 13045 Research Boulevard, Austin, Texas 78750.
(2) Does not include options granted to Mark T. Walton, Ronnie L. Spradling
and Michael B. Perrine to purchase 16,214, 37,546 and 53,334 shares of
Common Stock, respectively, which are not exercisable until more than 60
days after June 24, 1996. See "Management--Stock Option Plans and
Agreements."
(3) Assumes no exercise of the Underwriters' over allotment option.
(4) Includes 202,112 shares owned by Mr. Bohls' son, James Bohls, to which
Mr. E.D. Bohls controls the voting rights. Mr. E.D. Bohls disclaims
beneficial ownership of such shares. Also includes 50,816 shares held by
trusts for the benefit of James Bohls' children of which James Bohls
serves as trustee, but all voting rights have been retained by Mr. E.D.
Bohls.
(5) Includes 19,202 shares held by family trusts over which Mr. Siddons
exercises sole voting and investment control.
(6) Includes 4,053 shares subject to options exercisable within 60 days of
June 24, 1996 and 4,268 shares owned and held in trust for Mr. Walton's
children, for which the voting rights reside with Mr. Walton.
(7) Includes 9,387 shares subject to options exercisable within 60 days of
June 24, 1996.
(8) Includes 50,816 shares held by trusts for the benefit of Mr. Bohls'
children as to which he serves as trustee with full dispositive power.
Mr. E.D. Bohls retains all voting rights in such shares. James Bohls'
address is 1301 South IH-35, Austin, Texas 78701.
(9) Jesse C. Cox's address is 12300 IH-10, San Antonio, Texas 78230.
(10) Shares are held in trust for the benefit of Blake Bohls. Mr. James Bohls
serves as trustee with full dispositive power. Mr. E.D. Bohls retains all
voting rights in such shares.
(11) Shares are held in trust for the benefit of Mason Bohls. Mr. James Bohls
serves as trustee with full dispositive power. Mr. E.D. Bohls retains all
voting rights in such shares.
(12) Includes 13,333 shares subject to options exercisable within 60 days of
June 24, 1996.
(13) See Notes (7), (11) and (12). Includes 26,773 shares subject to options
exercisable within 60 days of June 24, 1996.
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<PAGE>
DESCRIPTION OF CAPITAL STOCK
The following summary of certain provisions of the capital stock of the
Company and Bylaws does not purport to be complete and is subject to and
qualified in its entirety by the Articles of Incorporation of the Company
which are included as exhibits to the registration statement of which this
Prospectus is a part, and by the provisions of applicable law.
AUTHORIZED AND OUTSTANDING CAPITAL STOCK
Effective prior to the closing of this offering, the authorized capital
stock of the Company will consist of 50,000,000 shares of Common Stock, $.01
par value, and 1,000,000 shares of Preferred Stock, $.01 par value, issuable
in series. As of the date of this Prospectus, 2,683,506 shares of Common Stock
were issued and outstanding and held by 24 persons. A total of 133,867 shares
of Common Stock are reserved for issuance upon the exercise of options granted
to Mark T. Walton, Ronnie L. Spradling and Michael B. Perrine, and 200,000
shares of Common Stock are reserved for issuances of Awards under the
Incentive Stock Plan. No shares of Preferred Stock are issued or outstanding.
COMMON STOCK
The holders of Common Stock are entitled to one vote for each share held on
all matters submitted to a vote of stockholders, voting with the holders of
Preferred Stock as a single class, except where class voting is required by
the Texas Business Corporation Act. Cumulative voting in the election of
directors is not permitted and the holders of a majority of the combined
number of outstanding shares of Common Stock and Preferred Stock entitled to
vote in any election of directors may elect all of the directors standing for
election. Upon the closing of this offering, the holders of a majority of the
outstanding shares of Common Stock will be able to elect all of the directors.
Holders of Common Stock are entitled to receive ratably such dividends, if
any, as may be declared by the Board of Directors out of funds legally
available therefor, subject to any preferential dividend rights of outstanding
Preferred Stock. Upon a liquidation, dissolution or winding up of the Company,
the holders of Common Stock are entitled to receive ratably the net assets of
the Company available after the payment of all debts and other liabilities and
subject to the prior rights of any outstanding Preferred Stock. The holders of
Common Stock have no preemptive, subscription, redemption or conversion
rights. The outstanding shares of Common Stock are, and the shares offered by
the Company in this offering, will be, when issued and paid for, fully paid
and nonassessable.
PREFERRED STOCK
The Board of Directors may issue Preferred Stock in one or more series and
may designate the dividend rate, voting rights and other rights, preferences
and restrictions of each series without further stockholder approval. It is
not possible to predict the effect of the issuance of Preferred Stock upon the
rights of holders of Common Stock unless and until the Board of Directors
determines the specific rights of the holders of a series of Preferred Stock.
However, such effects might include, among other things, restricting dividends
on Common Stock, diluting the voting power of Common Stock, impairing the
liquidation rights of Common Stock and delaying, discouraging or preventing a
change in control of the Company without further action by the stockholders.
ANTI-TAKEOVER PROVISIONS
Certain provisions of the Company's Articles of Incorporation and Bylaws,
the Company's Incentive Stock Plan and the indemnification agreements with
directors and officers of the Company may be deemed to have an anti-takeover
effect and may delay, defer or prevent a tender offer or takeover attempt that
a stockholder might consider to be in that stockholder's best interest,
including attempts that might result in a premium over the market price for
the shares held by stockholders.
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<PAGE>
Articles of Incorporation and Bylaws. Pursuant to the Company's Articles of
Incorporation, the Company's Board of Directors may issue additional shares of
Common Stock or establish one or more series of Preferred Stock having the
number of shares, designations, relative voting rights, dividend rates,
liquidation and other rights, preferences and limitations that the Board of
Directors fixes without stockholder approval. Any additional issuance of
Common Stock or designation of rights, preferences, privileges and limitations
with respect to Preferred Stock could have the effect of impeding or
discouraging the acquisition of control of the Company by means of a merger,
tender offer, proxy contest or otherwise, and thereby protect the continuity
of the Company's management. Specifically, if, in the due exercise of its
fiduciary obligations, the Board of Directors were to determine that a
takeover proposal was not in the Company's best interest, shares could be
issued by the Board of Directors without stockholder approval in one or more
transactions that might prevent or render more difficult or costly the
completion of the takeover transactions by diluting the voting or other rights
of the proposed acquiror or insurgent stockholder group, by putting a
substantial voting lock in institutional or other hands that might undertake
to support the position of the incumbent Board of Directors, by effecting an
acquisition that might complicate or preclude the takeover, or otherwise.
The Company's Bylaws provide that the Board of Directors shall be divided
into three classes of two or three directors each, with each class elected for
three-year terms expiring in successive years. The effect of these provisions
may be to delay or prevent a tender offer or takeover attempt that a
stockholder might consider to be in his best interest, including attempts that
might result in a premium over the market price for the shares held by the
stockholders. Cumulative voting in the election of directors is specifically
denied. Although the Bylaws do not give the Board any power to approve or
disapprove stockholder nominations for the election of directors or of any
other business desired by stockholders to be conducted at an annual or any
other meeting, provisions of the Bylaws (i) may have the effect of precluding
a nomination for the election of directors or precluding the conduct of
business at a particular annual meeting if the proper procedures are not
followed and (ii) may discourage or deter a third party from conducting a
solicitation of proxies to elect its own slate of directors or otherwise
attempting to obtain control of the Company, even if the conduct of such
solicitation or attempt might be beneficial to the Company and its
stockholders.
The Company's Articles of Incorporation and Bylaws provide that special
meetings of stockholders generally can be called only by the President or
Board of Directors or by holders of at least 25% of the voting stock of the
Company and provide for an advance notice procedure for the nomination, other
than by or at the direction of the Board of Directors or a committee of the
Board of Directors, of candidates for election as directors as well as for
other stockholder proposals to be considered at annual meetings of
stockholders. In general, notice of intent to nominate a director or raise
business at such meetings must be received by the Company not less than 30 nor
more than 60 days before the meeting, and must contain certain information
concerning the person to be nominated or the matters to be brought before the
meeting and concerning the stockholder submitting the proposal.
Incentive Stock Plan. Awards granted pursuant to the Company's Incentive
Stock Plan may provide that, under certain circumstances, upon a change in
control of the Company, all outstanding stock options will become immediately
vested and exercisable in full and the restriction period on any restricted
stock award will be accelerated and the restrictions shall expire. It is
anticipated that all options granted under the Incentive Stock Plan will
contain such a provision. As of the date of this Prospectus, no options have
been granted under the Incentive Stock Plan. See "Management--Stock Option
Plans and Agreements."
Indemnification of Officers and Directors; Limitation of Director
Liability. The Company has entered into indemnification agreements with all of
its directors and executive officers, which, among other things, require the
Company to indemnify directors against liability arising from stockholder
claims of a breach of duty by a director if a director votes against a
transaction that would result in a change of control of the Company. The
Company's Articles of Incorporation also provide that its directors shall not
be liable for monetary damages caused by an act or omission occurring in their
capacity as directors. This provision does not eliminate the duty of care,
and, in appropriate circumstances, equitable remedies such as injunctive or
other forms of non-monetary relief will remain available under Texas law. In
addition, each director will continue to be subject to liability for
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<PAGE>
breach of the director's duty of loyalty to the Company, for acts or omissions
not in good faith or involving intentional misconduct, for knowing violations
of law, for actions leading to improper personal benefit to a director and for
payment of dividends or acts or omissions for which a director is made
expressly liable by applicable statute. The limitations on liability provided
for in the Company's Articles of Incorporation do not restrict the
availability of non-monetary remedies and do not affect a director's
responsibilities under any other law, such as the federal securities laws or
state or federal environmental laws. The Company believes that these
provisions will assist the Company in attracting and retaining qualified
individuals to serve as executive officers and directors.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Company's Common Stock is KeyCorp
Stockholder Services, Inc., Dallas, Texas.
43
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, the Company will have outstanding
3,996,006 shares of Common Stock (4,258,506 shares if the Underwriters' over-
allotment option is exercised in full), assuming no exercise of options
outstanding as of May 1, 1996. Of these shares, all 1,750,000 of the shares of
Common Stock offered hereby (2,012,500 shares if the Underwriters' over-
allotment option is exercised in full) will be freely tradeable in the public
market without restriction by persons other than "affiliates" of the Company,
as that term is defined in Rule 144 under the Securities Act.
The remaining 2,683,506 shares of Common Stock will be "restricted"
securities within the meaning of Rule 144 and may not be sold unless
registered under the Securities Act or an exemption therefrom is available,
such as Rule 144 or Rule 144A.
The Company, its officers and directors and certain stockholders, who
collectively own an aggregate of 2,683,506 shares of Common Stock prior to the
offering, have agreed not to offer for sale, sell or otherwise dispose of,
directly or indirectly, any shares of Common Stock (other than the shares to
be sold by the Selling Stockholders in this offering) or any securities
convertible into or exchangeable or exercisable for Common Stock or sell or
grant options, rights or warrants with respect to any shares of Common Stock
(other than the grant of options pursuant to option plans existing on the date
hereof) without the prior consent of Robertson, Stephens & Company for a
period of 180 days following the date of this Prospectus (the "Lock-Up
Period"). Following the expiration of such 180-day period, 2,594,159 of such
shares will be eligible for resale in the public market subject, where
applicable, to the volume limitations and other requirements of Rule 144. The
shares subject to the lock-up agreements include all outstanding shares that
would otherwise be eligible for resale in the public market pursuant to Rule
144 beginning 90 days after the date of this Prospectus. In addition to the
foregoing, as of May 1, 1996, there were outstanding options to purchase an
aggregate of 133,867 shares of Common Stock. Of the shares underlying such
options, 26,773 shares will be eligible for sale upon expiration of the Lock-
Up Period. The remaining 107,094 shares underlying such options will become
eligible for sale more than 180 days after the date of this Prospectus as such
options vest. Robertson, Stephens & Company has informed the Company that it
has no current intention to release shares during the Lock-Up Period. Any
request for release would be evaluated by Robertson, Stephens & Company, and
the decision whether to permit early release of shares would be made dependent
upon the facts and circumstances existing at the time of the request.
In general, under Rule 144 as currently in effect, any person (or persons
whose shares are aggregated), including an affiliate, who has beneficially
owned "restricted" shares for at least two years (including the holding period
of any prior owner except an affiliate from whom such shares were purchased)
may sell within any three-month period commencing 90 days after the date of
this Prospectus, a number of shares that does not exceed the greater of 1.0%
of the then outstanding shares of Common Stock (approximately 39,960 shares
immediately after this offering, or approximately 42,585 shares if the
Underwriters' over-allotment option is exercised in full) or the average
weekly trading volume in Common Stock during the four calendar weeks preceding
the date on which notice of such sale is filed with the Securities and
Exchange Commission (the "Commission"). Sales under Rule 144 are also subject
to certain provisions relating to the manner and notice of sale and
availability of current public information about the Company. Affiliates may
sell shares which are not "restricted" shares in accordance with volume
limitations and other restrictions, but without regard to the two-year holding
period. A person who is not an affiliate of the Company at any time during the
90 days preceding a sale and who beneficially owns shares that were not
acquired from the Company or an affiliate of the Company within the past three
years may sell such shares under Rule 144 without regard to volume
limitations, manner of sale and notice provisions or the availability of
current public information concerning the Company.
The Company intends to file a registration statement on Form S-8 under the
Securities Act to register all 200,000 shares reserved for issuance under the
Incentive Stock Plan, as well as 133,867 shares issuable upon exercise of
outstanding options under the Option Agreements. All shares acquired in the
future under the Incentive Stock Plan or pursuant to the Option Agreements
will be available for resale by non-affiliates in the public market without
restriction, subject, however, to lock-up agreements with respect to such
shares. Shares
44
<PAGE>
acquired by affiliates under the Incentive Stock Plan or the Option Agreements
may not be resold unless they are registered under the Securities Act or resold
pursuant to an exemption from such registration, such as Rule 144.
Prior to this offering, there has been no public market for the Common Stock,
and no prediction can be made as to the effect, if any, that market sales of
shares of Common Stock or the availability of shares of Common Stock for sale
will have on the market price of the Common Stock prevailing from time to time.
Nevertheless, sales of substantial shares of Common Stock of the Company in the
public market could adversely affect prevailing market prices and could impair
the Company's future ability to raise capital through the sale of its equity
securities.
45
<PAGE>
UNDERWRITING
The Underwriters named below (the "Underwriters"), acting through their
representatives, Robertson, Stephens & Company LLC ("Robertson, Stephens &
Company") and Principal Financial Securities, Inc. (the "Representatives"),
have severally agreed with the Company and the Selling Stockholders, subject
to the terms and conditions of the Underwriting Agreement, to purchase from
the Company and the Selling Stockholders the number of shares of Common Stock
set forth opposite their respective names below. The Underwriters are
committed to purchase and pay for all such shares if any are purchased.
<TABLE>
<CAPTION>
NUMBER
UNDERWRITER OF SHARES
----------- ---------
<S> <C>
Robertson, Stephens & Company LLC..................................
Principal Financial Securities, Inc. ..............................
---------
Total............................................................ 1,750,000
=========
</TABLE>
The Representatives have advised the Company and the Selling Stockholders
that the Underwriters propose to offer the shares of Common Stock to the
public at the initial public offering price set forth on the cover page of
this Prospectus, and to certain dealers at such price less a concession not in
excess of $ per share. The Underwriters may allow, and such dealers may re-
allow, a concession not in excess of $ per share to certain other dealers.
After the initial public offering, the public offering price, concessions and
reallowances to dealers may be reduced by the Representatives. No such
reduction shall change the amount of proceeds to be received by the Company as
set forth on the cover of this Prospectus.
The Company has granted to the Underwriters an option, exercisable not later
than 30 days from the date of this Prospectus, to purchase up to 262,500
additional shares of Common Stock at the initial public offering price less
the underwriting discounts and commissions set forth on the cover page of this
Prospectus. To the extent that the Underwriters exercise such option, each of
the Underwriters will have a firm commitment to purchase approximately the
same percentage thereof that the number of shares of Common Stock to be
purchased by it shown in the above table bears to the total shares of Common
Stock listed in such table, and the Company will be obligated, pursuant to
such option, to sell such shares to the Underwriters. The Underwriters may
exercise such option only to cover over-allotments made in connection with the
sale of Common Stock offered hereby. If purchased, the Underwriters will offer
such additional shares on the same terms as those on which the 1,750,000
shares are being offered.
The Underwriting Agreement contains covenants of indemnity among the
Underwriters, the Company and the Selling Stockholders against certain
liabilities, including liabilities under the Securities Act.
Pursuant to the terms of lock-up agreements, the officers, directors and
certain stockholders of the Company, including the Selling Stockholders, who
will hold in the aggregate approximately 2,246,006 shares of Common Stock
following this offering, have agreed that they will not directly or indirectly
offer to sell, sell, or otherwise dispose of shares of Common Stock or any
securities convertible or exchangeable therefor, for a period of 180 days
after the date of this Prospectus, without the prior written consent of
Robertson, Stephens & Company. Robertson, Stephens & Company may, in its sole
discretion and at any time without notice, release all or any portion of the
securities subject to lock-up agreements. See "Shares Eligible for Future
Sale." In addition, the Company has agreed not to offer to sell, sell or
otherwise dispose of any shares of Common Stock for a period of 180 days after
the date of this Prospectus without the prior written consent of Robertson,
Stephens & Company, except for the shares of Common Stock offered hereby and
except that the Company may issue securities pursuant to the Company's
Incentive Stock Plan and upon the exercise of outstanding options and
warrants.
The Representatives have advised the Company and the Selling Stockholders
that the Underwriters do not intend to confirm sales to any accounts over
which they exercise discretionary authority.
46
<PAGE>
During 1995, the Company paid Principal Financial Securities, Inc. a fee in
the amount of $15,000 in connection with its due diligence investigation of
the Company relating to this offering.
Prior to this offering, there has been no public market for the Common Stock
of the Company. Consequently, the initial public offering price for the Common
Stock will be determined by negotiations among the Company and the
Representatives. The factors to be considered in such negotiations will be the
prevailing market conditions, the results of operations of the Company in
recent periods, the market capitalizations and stages of development of other
companies which the Company and the Representatives believe to be comparable
to the Company, estimates of the business potential of the Company and the
present state of the Company's development. There can be no assurance that an
active or orderly trading market will develop for the Company's Common Stock
or that the Common Stock will trade in the public market subsequent to this
offering at or above the initial public offering price.
47
<PAGE>
LEGAL MATTERS
Certain legal matters with respect to the validity of shares of Common Stock
offered hereby are being passed upon for the Company by Jenkens & Gilchrist, a
Professional Corporation, Austin, Texas, and for the Underwriters by Brobeck,
Phleger & Harrison LLP, Austin, Texas.
EXPERTS
The consolidated financial statements of the Company at September 30, 1995
and December 31, 1994 and for the fiscal year ended September 30, 1995 and
December 31, 1994, appearing in this Prospectus and Registration Statement have
been audited by Ernst & Young, LLP, independent auditors, as set forth in their
report thereon appearing elsewhere herein and in the Registration Statement,
and are included in reliance upon such report given upon the authority of such
firm as experts in accounting and auditing.
The consolidated financial statements of the Company at December 31, 1993 and
for the year then ended appearing in this Prospectus and Registration Statement
have been audited by Devona Jeffery, L.L.C., independent auditor, as set forth
in their report thereon appearing elsewhere herein, and are included in
reliance upon such report given upon the authority of such firm as expert in
accounting and auditing.
The consolidated statements of operations, retained earnings and cash flows
of Red River Marine, Inc. ended September 30, 1994 and 1995, included in this
Prospectus and Registration Statement, have been audited by Turner, Burkett &
Ring, P.A., Searcy, Arkansas, independent auditors, as set forth in their
report thereon appearing elsewhere herein, and are included in reliance upon
such report given upon the authority of such firm as experts in accounting and
auditing.
ADDITIONAL INFORMATION
The Company has filed a Registration Statement on Form S-1 (the "Registration
Statement") with the Commission under the Securities Act in respect of the
Common Stock offered hereby. For purposes of this Prospectus, the term
"Registration Statement" means the initial Registration Statement and any and
all amendments thereto. This Prospectus does not contain all of the information
contained in the Registration Statement and the exhibits and schedules thereto,
as permitted by the rules and regulations of the Commission. For further
information with respect to the Company and the Common Stock offered hereby,
reference is made to the Registration Statement, including the exhibits
thereto. Statements herein concerning the contents of any contract or other
document filed as an exhibit to the Registration Statement are not necessarily
complete, and in each instance reference is made to such contract or other
document filed with the Commission as an exhibit to the Registration Statement,
or otherwise, each such statement being qualified by and subject to such
reference in all respects.
As a result of the offering, the Company will become subject to the
informational requirements of the Exchange Act, and in accordance therewith,
will file reports and other information with the Commission. Reports,
registration statements, proxy statements, and other information filed by the
Company with the Commission can be inspected and copied at the public reference
facilities maintained by the Commission at Judiciary Plaza, 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549, and at its regional offices located at
500 West Madison Street, Suite 1400, Chicago, Illinois 60661; and 7 World Trade
Center, Suite 1300, New York, New York 10048.
The Company intends to furnish its stockholders with annual reports
containing audited consolidated financial statements certified by its
independent public accountants and quarterly reports for the first three
quarters of each fiscal year containing unaudited financial information.
48
<PAGE>
TRAVIS BOATS & MOTORS, INC. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Unaudited Pro Forma Condensed Consolidated Financial Statements........... F-2
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the
nine months ended
September 30, 1995....................................................... F-3
HISTORICAL FINANCIAL STATEMENTS
TRAVIS BOATS & MOTORS, INC. AND SUBSIDIARIES
Audited Consolidated Financial Statements
Reports of Independent Auditors........................................... F-4
Consolidated Balance Sheets--December 31, 1993 and 1994, and September 30,
1995..................................................................... F-6
Consolidated Statements of Operations for the Years ended December 31,
1993 and 1994 and the nine months ended September 30, 1995............... F-7
Consolidated Statements of Stockholders' Equity for the Years ended Decem-
ber 31, 1993 and 1994 and the nine months ended September 30, 1995....... F-8
Consolidated Statements of Cash Flows for the Years ended December 31,
1993 and 1994 and the nine months ended September 30, 1995............... F-9
Notes to Consolidated Financial Statements................................ F-10
Unaudited Interim Financial Statements
Unaudited Condensed Consolidated Balance Sheet as of March 31, 1996....... F-19
Unaudited Condensed Consolidated Statements of Operations for the six
months ended March 31, 1995 and 1996..................................... F-20
Unaudited Condensed Consolidated Statements of Cash Flows for the six
months ended March 31, 1995 and 1996..................................... F-21
Notes to Unaudited Condensed Consolidated Financial Statements............ F-22
RED RIVER MARINE, INC. AND SUBSIDIARY
Audited Consolidated Financial Statements
Report of Independent Auditors............................................ F-24
Consolidated Statements of Income and Retained Earnings for the Years
ended September 30, 1994 and 1995........................................ F-25
Consolidated Statements of Cash Flows for the Years ended September 30,
1994 and 1995............................................................ F-26
Notes to Financial Statements............................................. F-27
</TABLE>
F-1
<PAGE>
TRAVIS BOATS & MOTORS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The unaudited pro forma condensed consolidated statements of operations of
Travis Boats & Motors, Inc. (the Company) for the nine months ended September
30, 1995 reflect adjustments as if the acquisition of Red River Marine, Inc.
and the repayment of certain existing debt as contemplated by the Registration
Statement had occurred as of January 1, 1995.
The acquisition of Red River Marine, Inc. occurred on September 20, 1995 and
has been accounted for using the purchase method of accounting for business
combinations. Accordingly, the historical consolidated statements and
operations of the Company include the operations of Red River Marine, Inc.
since September 20, 1995.
The unaudited pro forma condensed consolidated financial statements should
be read in conjunction with the separate historical financial statements of
Travis Boats & Motors, Inc. and Red River Marine, Inc., related notes and
"Management's Discussions and Analysis of Financial Condition and Results of
Operations" appearing elsewhere in this Registration Statement. The pro forma
information is not necessarily indicative of the results that would have
resulted had the acquisition of Red River Marine, Inc. actually occurred on
the date assumed herein, nor is the pro forma information indicative of the
future results of the Company and its consolidated subsidiaries.
F-2
<PAGE>
TRAVIS BOATS & MOTORS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
TRAVIS BOATS LESS
& MOTORS RED RIVER RED RIVER
NINE MONTHS MARINE MARINE
ENDED YEAR ENDED THREE MONTHS
SEPTEMBER 30, SEPTEMBER 30, ENDED TRAVIS BOATS
1995 1995 DECEMBER 31, PRO FORMA & MOTORS
HISTORICAL HISTORICAL 1994 ADJUSTMENTS PRO FORMA
------------- ------------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Net sales............... $ 41,442,349 $ 14,085,084 $ 897,821 $ -- $ 54,629,612
Cost of goods sold...... (31,136,555) (11,316,009) (753,022) -- (41,699,542)
------------ ------------ --------- --------- ------------
Gross profit............ 10,305,794 2,769,075 144,799 -- 12,930,070
Operating expenses...... (6,569,809) (2,573,890) (484,640) 324,920(a),(b),(c) (8,334,139)
Interest expense........ (670,020) (331,318) (51,956) 523,000(d),(e) (426,382)
Other income............ 133,849 85,240 7,619 -- 211,470
------------ ------------ --------- --------- ------------
Income (loss) before
income taxes........... 3,199,814 (50,893) (384,178) 847,920 4,381,019
Income tax (expense).... (1,149,621) -- -- (427,546)(f) (1,577,167)
------------ ------------ --------- --------- ------------
Net income (loss)....... $ 2,050,193 $ (50,893) $(384,178) $ 420,374 $ 2,803,852
============ ============ ========= ========= ============
Net income per common
share.................. $ .76 $ 1.04
============ ============
Weighted average common
shares outstanding..... 2,683,506 2,683,506
</TABLE>
The following pro forma adjustments reflect the effect of the acquisition of
Red River Marine, Inc. and the transactions contemplated by the Registration
Statement as if such acquisition and such transactions had occurred on January
1, 1995. Adjustments included in the unaudited pro forma condensed
consolidated statement of operations for the nine months ended September 30,
1995 are as follows:
(a) To eliminate costs in the amount of $25,000 incurred by Red River
Marine in connection with the acquisition.
(b) To reflect nine months of amortization expense in the amount of
$52,500 on costs in excess of net assets acquired recorded in connection
with the acquisition.
(c) To eliminate excess owner's compensation and related expenses in the
amount of $352,420, all of which were directly attributable to the
acquisition.
(d) To reflect nine months of interest expense in the amount of $84,000
on notes payable issued in connection with the acquisition (average
interest rate of 8.75%).
(e) To eliminate interest expense on debt to be retired with proceeds
from the transactions contemplated by the Registration Statement as
follows:
. $523,000 related to floor plans payable and revolving lines of credit
(average interest rate of 5.3%)
. $84,000 related to notes payable issued in connection with the
acquisition (average interest rate of 8.75%)
(f) To reflect income taxes at the Company's effective tax rate of 36%.
F-3
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
Travis Boats & Motors, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheets of Travis Boats
& Motors, Inc. and Subsidiaries as of September 30, 1995 and December 31, 1994
and the related consolidated statements of operations, stockholders' equity
and cash flows for the nine-month period ended September 30, 1995 and the year
ended December 31, 1994. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Travis Boats
& Motors, Inc. and Subsidiaries as of September 30, 1995 and December 31, 1994
and the consolidated results of their operations and their cash flows for the
nine-month period ended September 30, 1995 and the year ended December 31,
1994, in conformity with generally accepted accounting principles.
November 8, 1995, except for Note 10, as to which the date is May 3, 1996
Austin, Texas
F-4
<PAGE>
May 17, 1994
President and Board of Directors
Travis Boats & Motors, Inc.
and Subsidiary Companies
Austin, Texas
We have audited the Consolidated Accompanying Balance Sheet of Travis Boats
& Motors, Inc. and Subsidiary Companies as of December 31, 1993, and the
related Consolidated Statements of Operations, Stockholders' Equity and Cash
Flows for the year then ended, in accordance with standards established by the
American Institute of Certified Public Accountants. All information included
in these financial statements are the representation of management of Travis
Boats & Motors, Inc. and Subsidiary Companies. Our responsibility is to
express an opinion on these Financial Statements based on our independent
audit.
We conducted the audit in accordance with Generally Accepted Auditing
Standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the consolidated balance sheet of Travis Boats & Motors,
Inc. and Subsidiary Companies as of December 31, 1993 presents fairly, in all
material respects, the financial position of Travis Boats & Motors, Inc. and
Subsidiary Companies and the results of their operations and their cash flows
for the year then ended, in conformity with Generally Accepted Accounting
Principles.
Devona Jeffery, L.L.C.
Austin, Texas
F-5
<PAGE>
TRAVIS BOATS & MOTORS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
------------------------ -------------
1993 1994 1995
----------- ----------- -------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............. $ 139,162 $ 258,752 $ 996,058
Accounts receivable................... 375,503 223,608 1,046,717
Prepaid expenses...................... 135,877 73,190 48,559
Inventories........................... 10,704,170 13,494,799 14,270,312
Deferred tax asset.................... -- -- 115,375
----------- ----------- -----------
Total current assets................ 11,354,712 14,050,349 16,477,021
Property and equipment:
Land.................................. 1,138,287 1,500,718 1,815,718
Buildings and improvements............ 1,897,149 2,246,627 4,183,718
Furniture, fixture and equipment...... 798,864 938,970 1,351,449
----------- ----------- -----------
3,834,300 4,686,315 7,350,885
Less accumulated depreciation......... (1,150,909) (1,342,728) (1,559,693)
----------- ----------- -----------
2,683,391 3,343,587 5,791,192
Deferred tax asset..................... -- -- 21,300
Costs in excess of net assets ac-
quired................................ 14,167 -- 1,050,000
Other assets........................... 35,700 40,167 17,150
----------- ----------- -----------
Total assets........................ $14,087,970 $17,434,103 $23,356,663
=========== =========== ===========
LIABILITIES
Current liabilities:
Accounts payable...................... $ 337,649 $ 196,056 $ 461,919
Accrued liabilities................... 197,568 784,165 1,188,355
Federal income taxes payable.......... 201,239 226,535 576,157
Current portion of notes payable and
other short-term obligations......... 10,607,640 10,977,126 11,442,625
----------- ----------- -----------
Total current liabilities........... 11,344,096 12,183,882 13,669,056
Notes payable, less current portion.... 1,012,644 2,587,994 4,875,745
Deferred revenue....................... 21,011 -- --
Redeemable preferred stock, Series A,
$100 par value, 10.5% noncumulative,
nonvoting, 10,000 shares authorized,
2,250, 1,000, and -0- shares issued
and outstanding at December 31, 1993
and 1994, and September 30, 1995,
respectively.......................... 225,000 100,000 --
Stockholders' equity:
Common stock, $.01 par value,
50,000,000 shares authorized,
2,564,331, 2,635,865 and 2,683,506
shares issued and outstanding at
December 31, 1993 and 1994, and at
September 30, 1995, respectively..... 25,643 26,358 26,835
Paid-in capital....................... 5,947 66,670 138,511
Retained earnings..................... 1,572,854 2,596,323 4,646,516
Notes receivable--stockholders........ (119,225) (127,124) --
----------- ----------- -----------
Total stockholders' equity.......... 1,485,219 2,562,227 4,811,862
----------- ----------- -----------
Total liabilities and stockholders'
equity............................. $14,087,970 $17,434,103 $23,356,663
=========== =========== ===========
</TABLE>
See accompanying notes.
F-6
<PAGE>
TRAVIS BOATS & MOTORS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS
DECEMBER 31, ENDED
------------------------ SEPTEMBER 30,
1993 1994 1995
----------- ----------- -------------
<S> <C> <C> <C>
Net sales............................. $25,756,505 $37,224,643 $41,442,349
Cost of goods sold.................... 19,810,693 28,490,216 31,136,555
----------- ----------- -----------
Gross profit.......................... 5,945,812 8,734,427 10,305,794
Selling, general and administrative
expenses............................. 4,496,029 6,332,883 6,352,844
Depreciation and amortization......... 179,527 266,299 216,965
----------- ----------- -----------
4,675,556 6,599,182 6,569,809
----------- ----------- -----------
Operating income...................... 1,270,256 2,135,245 3,735,985
Interest expense...................... (449,364) (628,685) (670,020)
Other income.......................... 82,822 61,348 133,849
----------- ----------- -----------
Income before income taxes............ 903,714 1,567,908 3,199,814
Income taxes.......................... 307,262 544,439 1,149,621
----------- ----------- -----------
Net income............................ $ 596,452 $ 1,023,469 $ 2,050,193
=========== =========== ===========
Net income per common share........... $ .23 $ .39 $ .76
=========== =========== ===========
Weighted average common shares out-
standing............................. 2,611,972 2,647,739 2,683,506
</TABLE>
See accompanying notes.
F-7
<PAGE>
TRAVIS BOATS & MOTORS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK NOTES
----------------- PAID-IN RETAINED RECEIVABLE--
SHARES AMOUNT CAPITAL EARNINGS STOCKHOLDERS TOTAL
--------- ------- -------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31,
1992................... 2,564,331 $25,643 $ 5,947 $ 976,402 $(173,066) $ 834,926
Net income............. -- -- -- 596,452 -- 596,452
Net proceeds on notes
receivable--
stockholders.......... -- -- -- -- 53,841 53,841
--------- ------- -------- ---------- --------- ----------
BALANCE AT DECEMBER 31,
1993 .................. 2,564,331 25,643 5,947 1,572,854 (119,225) 1,485,219
Issuance of common
stock................. 71,534 715 60,723 -- -- 61,438
Net income............. -- -- -- 1,023,469 -- 1,023,469
Net proceeds (issuance)
on notes receivable--
stockholders.......... -- -- -- -- (7,899) (7,899)
--------- ------- -------- ---------- --------- ----------
BALANCE AT DECEMBER 31,
1994................... 2,635,865 26,358 66,670 2,596,323 (127,124) 2,562,227
Issuance of common
stock................. 47,641 477 71,841 -- -- 72,318
Net income............. -- -- -- 2,050,193 -- 2,050,193
Net proceeds on notes
receivable--
stockholders.......... -- -- -- -- 127,124 127,124
--------- ------- -------- ---------- --------- ----------
BALANCE AT SEPTEMBER 30,
1995................... 2,683,506 $26,835 $138,511 $4,646,516 $ -- $4,811,862
========= ======= ======== ========== ========= ==========
</TABLE>
See accompanying notes.
F-8
<PAGE>
TRAVIS BOATS & MOTORS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
------------------------ -------------
1993 1994 1995
----------- ----------- -------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income............................ $ 596,452 $ 1,023,469 $ 2,050,193
Adjustments to reconcile net income to
net cash (used in) provided by
operating activities:
Depreciation and amortization....... 179,527 266,299 216,965
Loss on disposal of assets.......... 1,000 19,381 --
Changes in operating assets and lia-
bilities:
(Increase) decrease in accounts
receivable....................... (111,298) 151,895 (823,109)
(Increase) decrease in prepaid as-
sets............................. (56,538) 62,687 24,631
(Increase) decrease in invento-
ries............................. (3,260,728) (2,790,629) 349,830
Decrease in other assets.......... 7,469 9,700 23,017
Increase in deferred tax asset.... -- -- (136,675)
Increase (decrease) in accounts
payable.......................... 320,021 (141,593) 265,863
Increase in accrued liabilities... 50,654 586,597 404,190
Increase in income taxes payable.. 21,358 25,296 349,622
Decrease in deferred charges...... (113,167) (21,011) --
----------- ----------- -----------
Net cash (used in) provided by operat-
ing activities....................... (2,365,250) (807,909) 2,724,527
INVESTING ACTIVITIES:
Purchase of business.................. -- -- (916,345)
Purchase of property and equipment.... (1,085,229) (937,004) (1,885,345)
----------- ----------- -----------
Net cash used in investing
activities........................... (1,085,229) (937,004) (2,801,690)
FINANCING ACTIVITIES:
Net increase in notes payable and
other short-term obligations......... 3,431,426 1,935,964 715,027
Issuance of common stock.............. -- 61,488 72,268
Redemption of preferred stock......... -- (125,000) (100,000)
Net proceeds (issuance) on notes
receivable--stockholders............. 53,841 (7,949) 127,174
----------- ----------- -----------
Net cash provided by financing
activities........................... 3,485,267 1,864,503 814,469
Increase in cash and cash
equivalents.......................... 34,788 119,590 737,306
Cash and cash equivalents, beginning
of year.............................. 104,374 139,162 258,752
----------- ----------- -----------
Cash and cash equivalents, end of
year................................. $ 139,162 $ 258,752 $ 996,058
=========== =========== ===========
</TABLE>
See accompanying notes.
F-9
<PAGE>
TRAVIS BOATS & MOTORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business and Consolidation
Travis Boats & Motors, Inc. (the "Company") is a retailer of boats, motors,
trailers and related watersport accessories. The Company operates 11 locations
in Texas, Louisiana and Arkansas. The consolidated financial statements
include the accounts of the Company and its wholly-owned subsidiaries. All
significant intercompany accounts and transactions have been eliminated in
consolidation. In 1995, the Company changed its fiscal year end from December
31 to September 30 to coincide with the seasonal cycle of its business.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all
investments with maturities of ninety days or less when purchased to be cash
equivalents.
Inventories
Inventories are carried at the lower of cost or market. Cost is determined
using the specific identification method. Inventories consist of boats,
motors, trailers and related watersport accessories.
Property and Equipment
Property and equipment are stated at cost. Provisions for depreciation are
determined using double-declining balance and straight-line methods. The
Company uses estimated useful lives of 5-20 years for buildings and
improvements and 5-10 years for furniture, fixtures and equipment. The Company
capitalized interest of approximately $80,000 during the nine months ended
September 30, 1995 in connection with the construction of a store location. No
interest was capitalized in the years ended December 31, 1993 and 1994.
Income Taxes
In accordance with Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes," deferred income taxes are provided for
temporary differences between the basis of assets and liabilities for
financial reporting purposes and for income tax return purposes.
Costs in Excess of Net Assets Acquired
Amounts assigned to costs in excess of net assets acquired are amortized
over the respective estimated useful lives using the straight-line method as
follows:
<TABLE>
<CAPTION>
LIFE
--------
<S> <C>
Noncompete agreement.......................... 7 years
Goodwill...................................... 25 years
</TABLE>
Accounts Receivable
Accounts receivable potentially expose the Company to concentrations of
credit risk, as defined by the Statement of Financial Accounting Standards No.
105, "Disclosure of Information about Financial Instruments with Off-Balance
Sheet Risk and Financial Instruments with Concentrations of Credit Risk."
Accounts receivable consist primarily of amounts due from financial
institutions upon sales contract funding and amounts
F-10
<PAGE>
TRAVIS BOATS & MOTORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
due from vendors under rebate programs. There was no allowance for doubtful
accounts recorded at December 31, 1993 and 1994 and September 30, 1995.
Pre-opening Costs
Pre-opening costs related to new store locations are expensed as incurred.
Advertising Costs
Advertising costs are expensed as incurred and were approximately $178,000,
$334,000, and $353,000 during the years ended December 31, 1993 and 1994 and
the nine months ended September 30, 1995, respectively.
Net Income per Common Share
Net income per common share is based on the weighted average number of
common shares outstanding during the period. Common stock issued during the
nine months ended September 30, 1995 has been included in the calculation of
weighted average common shares outstanding for all periods presented. The
effect of common stock equivalents is not significant.
Recently Issued Accounting Standards
In March 1995, the FASB issued Statement No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of,"
which requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the assets'
carrying amount. Statement No. 121 also addresses the accounting for long-
lived assets that are held for disposition. The Company will adopt Statement
No. 121 in 1996 and, based on current circumstances, does not expect a
material impact to the Company's results of operations or financial position.
In October 1995, the FASB issued Statement No. 123, "Accounting for Stock-
Based Compensation," which prescribes accounting and reporting standards for
all stock-based compensation plans, including employee stock options. The
Company must adopt the provisions of Statement No. 123 during the year ended
September 30, 1996. Under such provisions, the Company may elect to expense
the fair value of stock-based compensation or provide pro forma disclosures of
what net income would have been had the Company adopted the new fair value
method for recognition purposes. The Company continues to evaluate the
provisions of Statement No. 123 and has not determined whether it will adopt
the Statement for expense recognition purposes.
Reclassifications
Certain 1993 and 1994 amounts have been reclassified in order to conform
with the 1995 presentation.
2. NOTES PAYABLE AND OTHER SHORT-TERM OBLIGATIONS
Notes payable and other short-term obligations consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31
-------------------------- SEPTEMBER 30
1993 1994 1995
------------ ------------ ------------
<S> <C> <C> <C>
Floor plan payables............. $ 8,790,002 $ 10,223,665 $ 10,302,562
Revolving lines of credit....... 540,000 570,000 667,143
Notes payable................... 2,290,282 2,771,455 5,348,665
------------ ------------ ------------
Total notes payable and other
short-term obligations....... 11,620,284 $ 13,565,120 16,318,370
Less current portion............ (10,607,640) (10,977,126) (11,442,625)
------------ ------------ ------------
Total notes payable and other
short-term obligations, less
current portion.............. $ 1,012,644 $ 2,587,994 $ 4,875,745
============ ============ ============
</TABLE>
F-11
<PAGE>
TRAVIS BOATS & MOTORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. NOTES PAYABLE AND OTHER SHORT-TERM OBLIGATIONS (CONTINUED)
Floor plan payables consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------- SEPTEMBER 30,
1993 1994 1995
---------- ----------- -------------
<S> <C> <C> <C>
Floor plan payable to bank under a
$7,500,000 revolving line of
credit agreement with interest
floating at prime plus .25%,
maturing July 1996............... $3,658,375 $ 4,268,901 $ 2,163,267
Floor plan payable to bank under
revolving line of credit
agreements totaling $4,050,000
with interest floating at prime
plus .50% to prime plus 1%,
maturing May 1996 and August
1996............................. 630,220 610,185 1,224,389
Floor plans payable to commercial
finance companies under revolving
line of credit agreements with
interest ranging from 0% to prime
plus 4.75% with no stated
maturity date.................... 4,501,407 5,344,579 6,914,906
---------- ----------- -----------
Total floor plans payable......... $8,790,002 $10,223,665 $10,302,562
========== =========== ===========
</TABLE>
The floor plan payables are collateralized by specific boat, motor and
trailer inventory, as well as general security filings on all inventory and
equipment. The floor plan payables to finance companies include non-interest
bearing payment terms for part of the calendar year (typically the months of
August through April). As of December 31, 1993 and 1994, and September 30,
1995, the amount of non-interest bearing floor plans payable to finance
companies was $4,389,639, $4,478,125 and $6,522,829, respectively.
Floor plan payables of certain of the Company's subsidiaries are guaranteed
by the Company. Certain floor plan payables are guaranteed in limited dollar
amounts by various stockholders of the Company. The Company is significantly
limited as to annual dividends for preferred and common stock.
Borrowings under revolving lines of credit consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------- SEPTEMBER 30,
1993 1994 1995
-------- -------- -------------
<S> <C> <C> <C>
Note payable to bank under a $500,000
revolving line of credit agreement with
interest at prime plus .25%, due July
1996................................... $500,000 $500,000 $470,000
Notes payable to bank under $250,000
revolving line of credit agreements
with interest at prime due plus 1%,
February 1996 and May 1996............. 40,000 70,000 197,143
-------- -------- --------
Borrowings under lines of credit........ $540,000 $570,000 $667,143
======== ======== ========
</TABLE>
The weighted average interest rate on floor plan payables and revolving
lines of credit outstanding as of December 31, 1993, December 31, 1994 and
September 30, 1995 is 3.9%, 5.2% and 5.3%, respectively.
F-12
<PAGE>
TRAVIS BOATS & MOTORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. NOTES PAYABLE AND OTHER SHORT-TERM OBLIGATIONS (CONTINUED)
Notes payable consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------- SEPTEMBER 30,
1993 1994 1995
---------- ---------- -------------
<S> <C> <C> <C>
Mortgage notes payable to various
banks, organizations and
individuals under deeds of trust
with interest ranging from 6.0% to
10.5% due in monthly principal and
interest installments ranging from
$1,225 to $30,114, maturing
beginning in April 1998........... $1,269,105 $2,134,561 $3,266,475
Notes payable to various banks, a
corporation and an individual for
equipment with interest ranging
from 6.99% to 11.0%, due in
monthly installments ranging from
$333 to $10,500, maturing
beginning in December 1995........ 130,065 85,228 580,524
Notes payable to individuals with
interest at prime plus 1% fixed
annually, due in annual principal
installments of $20,000
(aggregate) plus interest,
maturing October 1997,
collateralized by approximately
90,000 shares of the Company's
outstanding common stock owned by
certain directors and officers of
the Company....................... 80,000 60,000 60,000
Notes payable (unsecured) to
corporation(s) owned by various
stockholders of the Company and to
stockholders individually, with
interest due quarterly at various
rates at or below prime plus 1%,
maturing October 1996............. 91,667 491,666 641,666
Note payable to individual with
interest at 8.75%, due in monthly
principal and interest
installments of $12,543, maturing
November 2002..................... -- -- 800,000
Interim construction note payable
to a bank under a deed of trust
with interest at prime plus 1%,
maturing April 1994............... 705,834 -- --
Note payable to individual with
interest at 10%, due in monthly
principal and interest
installments of $1,186............ 13,611 -- --
---------- ---------- ----------
Total notes payable................ $2,290,282 $2,771,455 $5,348,665
========== ========== ==========
</TABLE>
Certain notes payable are collateralized by assets of the Company including
inventory, accounts receivable, equipment, leasehold improvements, vehicles,
company stock, land and buildings. Notes payable of certain of its subsidiaries
are guaranteed by the Company. Certain notes payable are guaranteed in limited
dollar amounts by various stockholders of the Company.
F-13
<PAGE>
TRAVIS BOATS & MOTORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. NOTES PAYABLE AND OTHER SHORT-TERM OBLIGATIONS (CONTINUED)
Interest paid was approximately $440,000, $641,000, and $843,000, in the
years ended December 31, 1993 and 1994 and the nine months ended September 30,
1995, respectively.
Aggregate maturities required on notes payable at September 30, 1995 are as
follows:
<TABLE>
<CAPTION>
YEAR ENDING
SEPTEMBER 30
------------
<S> <C>
1996....................................... $ 472,920
1997....................................... 1,208,899
1998....................................... 534,539
1999....................................... 360,868
2000....................................... 492,964
Thereafter................................. 2,278,475
----------
$5,348,665
==========
</TABLE>
3. LEASES
The Company leases various facilities under operating leases. Rent expense
was $246,979 in 1993, $214,421 in 1994 and $188,581 in 1995. Generally, the
leases provide for renewals for various periods at stipulated rates. Future
minimum rentals due under noncancelable leases are as follows for each of the
years ending September 30:
<TABLE>
<S> <C>
1996.......................................... $227,748
1997.......................................... 36,066
1998 and thereafter........................... --
</TABLE>
In addition, under most of the Company's leases, the Company has renewal
options at varying terms.
4. ACQUISITION
Effective September 20, 1995, the Company acquired Red River Marine, Inc.
with retail store locations in Hot Springs and Heber Springs, Arkansas. This
acquisition included land and building (Hot Springs location) and boat, motor
and trailer inventory, as well as parts and accessories inventory of each
location. The purchase price was $2,517,417 of which approximately $1,600,000
was financed by the issuance of notes payable to the seller.
The acquisition has been accounted for using the purchase method of
accounting and, accordingly, the operating results of Red River Marine, Inc.
have been included in the consolidated financial statements from the date of
acquisition. The purchase price ($2,517,417) and liabilities assumed
($437,150) have been allocated to the tangible net assets acquired
($1,904,567) based on their respective fair values at the date of acquisition.
The resulting excess purchase price ($1,050,000) was allocated to a noncompete
agreement ($300,000) and goodwill ($750,000).
F-14
<PAGE>
TRAVIS BOATS & MOTORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. ACQUISITION (CONTINUED)
The unaudited pro forma combined condensed results of operations of the
Company for the nine months ended September 30, 1995 and the year ended
December 31, 1994 as if the purchase had occurred on January 1, 1994 on the
basis described above are as follows:
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1994 SEPTEMBER 30, 1995
----------------- ------------------
<S> <C> <C>
Revenue.............................. $50,400,575 $54,629,612
=========== ===========
Net income........................... $ 1,341,310 $ 2,469,132
=========== ===========
Net income per common share.......... $ .51 $ .92
=========== ===========
</TABLE>
The pro forma information does not purport to represent what the Company's
results of operations would actually have been had the acquisition occurred at
the beginning of the period indicated, nor to project the Company's results of
operations for any future date or period.
5. INCOME TAXES
In 1992, the Financial Accounting Standards Board issued Statement No. 109,
"Accounting for Income Taxes." The Company adopted the provisions of the new
standard in its financial statements for the year ended December 31, 1994. The
cumulative effect as of January 1, 1994 of adopting the Standard was
immaterial and the prior year financial statements have not been restated to
reflect the change in accounting method.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components
of the Company's deferred tax liabilities and assets are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------- SEPTEMBER 30,
1993 1994 1995
------ ------ -------------
<S> <C> <C> <C>
Deferred tax assets:
Book over tax deprecia-
tion................... $ -- $ -- $ 21,300
Accrued salaries and
wages.................. -- -- 115,375
------ ------ --------
Total deferred tax as-
sets..................... -- -- 136,675
Valuation allowance for
deferred tax assets...... -- -- --
------ ------ --------
Net deferred tax assets... $ -- $ -- $136,675
====== ====== ========
</TABLE>
F-15
<PAGE>
TRAVIS BOATS & MOTORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. INCOME TAXES (CONTINUED)
Significant components of the provision for income taxes are as follows:
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED DECEMBER 31 ENDED
----------------------- SEPTEMBER 30
1993 1994 1995
----------- ----------- ------------
<S> <C> <C> <C>
Current expense:
Federal.................................. $ 307,262 $ 523,589 $1,243,371
State.................................... -- 20,850 42,925
----------- ----------- ----------
Total current expense.................. 307,262 544,439 1,286,296
=========== =========== ==========
Deferred expense (benefit):
Federal.................................. -- -- (130,900)
State.................................... -- -- (5,775)
----------- ----------- ----------
Total deferred expense (benefit)....... -- -- (136,675)
----------- ----------- ----------
Total provision for income taxes........... $ 307,262 $ 544,439 $1,149,621
=========== =========== ==========
</TABLE>
The differences between the effective tax rate and the U.S. federal
statutory rate of 34% are reconciled as follows:
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED DECEMBER 31 ENDED
----------------------- SEPTEMBER 30
1993 1994 1995
----------- ----------- ------------
<S> <C> <C> <C>
Income tax expense at the federal statu-
tory rate.............................. $ 307,262 $ 533,089 $1,087,937
State income taxes..................... -- 20,850 37,150
Other.................................. -- (9,500) 24,534
----------- ----------- ----------
$ 307,262 $ 544,439 $1,149,621
=========== =========== ==========
</TABLE>
Income taxes paid were approximately $162,000, $528,000 and $855,000, in the
years ended December 31, 1993 and 1994 and the nine months ended September 30,
1995, respectively.
6. REDEEMABLE PREFERRED STOCK
On August 31, 1989, the Company issued 2,250 shares of Series A redeemable
preferred stock for $225,000. The preferred stock is noncumulative and has a
par value and redemption value of $100 per share. The holders of the preferred
stock are entitled to receive dividends at the rate of 10.5% annually if
declared by the Board of Directors. No dividends were declared or paid during
the years ended December 31, 1993 and 1994 and the nine months ended September
30, 1995. The Company must redeem all preferred stock outstanding within 10
years from the date of issuance or August 31, 1999. The Company redeemed 1,250
shares in 1994 and 1,000 shares in 1995 for $125,000 and $100,000,
respectively. No preferred stock was outstanding at September 30, 1995.
7. STOCKHOLDERS' EQUITY
In March 1994, the Board of Directors of the Company approved a 199 for 1
stock dividend for stockholders of record as of March 31, 1994. See also Note
10.
The Company has granted options to purchase shares of the Company's common
stock to certain officers of the Company which vest over five years.
F-16
<PAGE>
TRAVIS BOATS & MOTORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. STOCKHOLDERS' EQUITY (CONTINUED)
Total option activity for the years ended December 31, 1993 and 1994 and the
nine months ended September 30, 1995, was as follows:
<TABLE>
<CAPTION>
NUMBER OF
SHARES PRICE $
--------- -------
<S> <C> <C>
Outstanding at December 31, 1992........................ -- --
Granted............................................... -- --
Exercised............................................. -- --
Expired............................................... -- --
-------
Outstanding at December 31, 1993........................ -- --
Granted............................................... -- --
Exercised............................................. -- --
Expired............................................... -- --
-------
Outstanding at December 31, 1994........................ -- --
Granted............................................... 133,867 $5.25
Exercised............................................. -- --
Expired............................................... -- --
-------
Outstanding at September 30, 1995....................... 133,867 $5.25
=======
Exercisable at September 30, 1995....................... -- --
=======
</TABLE>
8. RELATED PARTY TRANSACTIONS
The Company sells extended service contracts to its customers. The
obligations of the Company under these contracts are transferred to Ideal
Insurance Company, Ltd. (Ideal) pursuant to an agreement between the Company
and Ideal dated as of January 1, 1994. Ideal reinsures these risks with
Amerisure Property & Casualty, Ltd. (Amerisure), a company wholly owned by
certain principal shareholders of the Company. These contracts are
administered by First Extended Service Corporation (FESC), which contracts are
insured by FESC's affiliate, FFG Insurance Co. (FFG). In conjunction with
these agreements, the Company pays Amerisure an agreed amount for each
extended service contract which is insured and, in the event of claims under
any extended service contracts, Amerisure reimburses the repair facility for
the amount of covered claims. Amerisure is then financially responsible for
any repairs required pursuant to the extended service contract. The Company
receives a commission for each extended service contract that it sells. For
the years ended December 31, 1993 and 1994, and the nine-month period ended
September 30, 1995, extended service contract commissions totaled
approximately $-0-, $350,000 and $448,000, respectively.
9. COMMITMENTS AND CONTINGENCIES
The Company is currently involved in several matters regarding pending or
threatened litigation in the normal course of business. Management does not
expect the ultimate resolution of these matters to have a material adverse
effect on the Company's consolidated financial statements.
10. SUBSEQUENT EVENTS
Effective December 14, 1995, the Company adopted an Incentive Stock Option
Plan which provides for the granting of options to directors, officers, and
key employees to purchase shares of the Company's common stock. The Company
has reserved 200,000 shares of common stock for issuance under such plan.
F-17
<PAGE>
TRAVIS BOATS & MOTORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
10. SUBSEQUENT EVENTS (CONTINUED)
Effective December 14, 1995, the Company changed the stated par value of each
share of common stock from $.10 to $.01. The financial statements have been
restated to retroactively reflect the above change in par value.
In November 1995, the Board of Directors of the Company approved a 15 for 1
stock dividend for stockholders of record as of November 8, 1995.
In May 1996, the Board of Directors of the Company approved a 1 for 3 stock
dividend for stockholders of record as of May 3, 1996.
All share amounts presented in these financial statements have been restated
to retroactively reflect the above stock dividends.
F-18
<PAGE>
TRAVIS BOATS & MOTORS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1996
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents........................................ $ 664,969
Accounts receivable.............................................. 4,455,289
Prepaid expenses................................................. 131,775
Inventories...................................................... 28,733,265
Deferred tax asset............................................... 76,160
-----------
Total current assets........................................... 34,061,458
Property and equipment:
Land............................................................. 1,815,718
Buildings and improvements....................................... 4,876,653
Furniture, fixture and equipment................................. 1,627,843
-----------
8,320,214
Less accumulated depreciation.................................... (1,761,154)
-----------
6,559,060
Cost in excess of net assets acquired.............................. 1,101,114
Other assets....................................................... 176,181
-----------
Total assets....................................................... $41,897,813
===========
</TABLE>
<TABLE>
<S> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable................................................. $ 735,925
Accrued liabilities.............................................. 1,237,219
Federal income taxes payable..................................... 487,000
Unearned revenue................................................. 2,769,714
Current portion of notes payable and other short-term obliga-
tions........................................................... 26,216,072
-----------
Total current liabilities...................................... 31,445,930
Notes payable, less current portion................................ 5,397,066
Stockholders' equity:
Common stock, $.01 par value, 50,000,000 shares authorized,
2,683,506 shares issued and outstanding......................... 26,835
Paid-in capital.................................................. 138,511
Retained earnings................................................ 4,889,471
-----------
Total stockholders' equity......................................... 5,054,817
-----------
Total liabilities and stockholders' equity......................... $41,897,813
===========
</TABLE>
See accompanying notes.
F-19
<PAGE>
TRAVIS BOATS & MOTORS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
MARCH 31
------------------------
1995 1996
----------- -----------
<S> <C> <C>
Net sales............................................. $16,626,734 $22,016,532
Cost of good sold..................................... 12,852,973 16,445,167
----------- -----------
Gross profit.......................................... 3,773,761 5,571,365
Selling, general and administrative expenses.......... 3,216,600 4,301,986
Depreciation and amortization......................... 136,815 262,256
----------- -----------
3,353,415 4,564,242
----------- -----------
Operating income...................................... 420,346 1,007,123
Interest expense...................................... (370,659) (668,547)
Other income.......................................... 110,034 31,379
----------- -----------
Income before income taxes............................ 159,721 369,955
Income taxes.......................................... 61,512 127,000
----------- -----------
Net income............................................ $ 98,209 $ 242,955
=========== ===========
Net income per common share........................... $ .04 $ .09
=========== ===========
Weighted average common shares outstanding............ 2,683,506 2,683,506
</TABLE>
See accompanying notes.
F-20
<PAGE>
TRAVIS BOATS & MOTORS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED MARCH 31,
---------------------------
1995 1996
------------- -------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income....................................... $ 98,209 $ 242,955
Adjustments to reconcile net income to net cash (used in)
operating activities:
Depreciation and amortization.................. 136,815 262,256
Changes in operating assets and liabilities:
(Increase) in accounts receivable............ (1,209,236) (3,408,572)
(Increase) in prepaid assets................. (47,478) (83,216)
(Increase) in inventories.................... (8,592,777) (14,331,935)
(Increase) in other assets................... (11,601) (159,031)
Decrease in deferred tax asset............... -- 60,515
Increase in accounts payable................. 79,383 274,006
Increase in accrued liabilities.............. 247,937 48,864
(Decrease) in income taxes payable........... (500,000) (89,157)
Increase in unearned revenue................. -- 2,769,714
------------ -------------
Net cash (used in) provided by operating activi-
ties............................................ (9,798,748) (14,413,601)
INVESTING ACTIVITIES:
Purchase of business............................. -- (262,687)
Purchase of property and equipment............... (133,679) (883,515)
------------ -------------
Net cash used in investing activities............ (133,679) (1,146,202)
FINANCING ACTIVITIES:
Net increase in notes payable and other short-
term obligations................................ 9,388,893 15,228,714
Issuance of common stock......................... 10,230 --
Net proceeds (issuance) on notes receivable
stockholders.................................... 8,101 --
------------ -------------
Net cash provided by financing activities........ 9,407,224 15,228,714
Decrease in cash and cash equivalents............ (525,203) (331,089)
Cash and cash equivalents, beginning of period... 525,203 996,058
------------ -------------
Cash and cash equivalents, end of period......... $ -- $ 664,969
============ =============
Supplemental Cash Flow Information:
Interest paid.................................... $ 320,000 $ 746,000
Income taxes paid................................ $ 311,000 $ 190,000
</TABLE>
See accompanying notes.
F-21
<PAGE>
TRAVIS BOATS & MOTORS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information. Accordingly, they do not include all of the
information and notes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the six-months ended
March 31, 1996 may not be indicative of the results for the year ended
September 30, 1996.
2. NOTES PAYABLE AND OTHER SHORT-TERM OBLIGATIONS
Notes payable and other short-term obligations as of March 31, 1996 consist
of the following:
<TABLE>
<S> <C>
Floor plans payable.......................................... $24,233,120
Revolving lines of credit.................................... 650,000
Notes payable................................................ 6,730,018
-----------
Total notes payable and other short-term obligations....... 31,613,138
Less current portion......................................... 26,216,072
-----------
Total notes payable and other short-term obligations, less
current portion........................................... $ 5,397,066
===========
</TABLE>
The weighted average interest rate on floor plans payable and revolving
lines of credit outstanding as of March 31, 1996 is 5.3%.
3. ACQUISITION
Effective September 20, 1995, the Company acquired Red River Marine, Inc.
with retail store locations in Hot Springs and Heber Springs, Arkansas. The
acquisition included land and building (Hot Springs location) and boat, motor
and trailer inventory, as well as parts and accessories inventory of each
location. The purchase price was $2,517,417 of which approximately $1,600,000
was financed by the issuance of notes payable to the seller.
The acquisition has been accounted for using the purchase method of
accounting and, accordingly, the operating results of Red River Marine, Inc.
have been included in the consolidated financial statements from the date of
acquisition. The purchase price ($2,517,417) and liabilities assumed
($437,150) have been allocated to the tangible net assets acquired
($1,904,567) based on their respective fair values at the date of acquisition.
The resulting excess purchase price ($1,050,000) was assigned to noncompete
agreement ($300,000) and goodwill ($750,000).
Effective December 1, 1995, the Company acquired certain assets of Clay's
Boats & Motors, Inc. (Clay's) in New Iberia, Louisiana. The assets acquired
included furniture, fixtures and equipment, all parts and accessories, all
leasehold improvements and certain other miscellaneous assets. The purchase
price was $328,741, of which $262,687 was paid in cash and $66,054 was
financed by the issuance of a note payable to the seller.
The acquisition has been accounted for using the purchase method of
accounting and, accordingly, the operating results of Clay's have been
included in the consolidated financial statements from the date of
acquisition. The purchase price ($328,741) has been allocated to the tangible
net assets acquired ($240,669) and the resulting excess purchase price
($88,072) was assigned to goodwill.
F-22
<PAGE>
TRAVIS BOATS & MOTORS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. STOCKHOLDERS' EQUITY
In November 1995, the Board of Directors of the Company approved a 15 for 1
stock dividend for stockholders of record as of November 8, 1995.
Effective December 14, 1995, the Company changed the stated par value of
each share of common stock from $.10 to $.01.
In May 1996, the Board of Directors of the Company approved a 1 for 3 stock
dividend for stockholders of record as of May 3, 1996.
The financial statements have been restated to retroactively reflect the
above stock dividend and change in par value.
5. RELATED PARTY TRANSACTIONS
The Company sells extended service contracts to its customers. The
obligations to the Company under these contracts are transferred to ideal
Insurance Company, Ltd. (Ideal) pursuant to an agreement between the Company
and Ideal dated as of January 1, 1994. Ideal reinsures these risks with
Amerisure Property & Casualty, Ltd. (Amerisure), a company wholly owned by
certain principal shareholders of the Company. These contracts are
administered by First Extended Service Corporation (FESC), which contracts are
insured by FESC's affiliate, FFG Insurance Co. (FFG). In conjunction with
these agreements, the Company pays Amerisure an agreed amount for each
extended service contract which is insured and, in the event of claims under
any extended service contracts, Amerisure reimburses the repair facility for
the amount of covered claims. Amerisure is then financially responsible for
any repairs required pursuant to the extended service contract. The Company
receives a commission for each extended service contract that it sells. For
the six-month period ended March 31, 1995 and 1996, extended service contract
commissions totaled approximately $169,000 and $106,000, respectively.
F-23
<PAGE>
REPORT OF INDEPENDENT AUDITORS
December 5, 1995
To the Shareholder
Red River Marine, Inc.
Heber Springs, AR 72543
We have audited the accompanying consolidated statements of income, retained
earnings and cash flows of Red River Marine, Inc. and its subsidiary for the
two years ended September 30, 1995. These financial statements are the
responsibility of the company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated results of operations and cash
flows of Red River Marine, Inc. and its subsidiary for the two years ended
September 30, 1995, in conformity with generally accepted accounting
principles.
Turner, Burkett & Ring, P.A.
F-24
<PAGE>
RED RIVER MARINE, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30
-----------------------
1994 1995
----------- -----------
<S> <C> <C>
Sales.................................................. $13,175,932 $14,085,084
Cost of sales.......................................... 10,296,129 11,316,009
----------- -----------
Gross profit......................................... 2,879,803 2,769,075
Operating expenses:
Salaries and wages................................... 1,156,314 1,572,556
Repairs and maintenance.............................. 64,516 45,685
Auto expense......................................... 56,805 68,406
Insurance............................................ 137,456 102,597
Telephone and utilities.............................. 86,809 98,319
Advertising.......................................... 15,038 31,322
Office supplies and postage.......................... 18,641 18,097
Travel and entertainment............................. 22,411 38,594
Professional services................................ 20,237 44,631
Other................................................ 63,074 60,361
Commissions.......................................... 85,155 36,383
Payroll taxes........................................ 101,982 123,205
Depreciation......................................... 63,013 67,893
Operating supplies................................... 37,915 48,133
Contract labor....................................... 44,754 19,312
Freight.............................................. 82,051 76,418
Rent................................................. -- 24,833
Taxes and licenses................................... -- 29,216
Bad debts............................................ 53,750 37,742
Show expense......................................... 24,624 30,187
Profit sharing contribution.......................... 20,000 --
----------- -----------
Total operating expenses........................... 2,154,545 2,573,890
Income from operations............................... 725,258 195,185
</TABLE>
<TABLE>
<S> <C> <C>
Other income (expense):
Interest expense................................... $ (224,418) $ (331,318)
Interest income.................................... 29,074 32,927
Other income....................................... 26,795 52,313
----------- -----------
Total other income (expense)..................... (168,549) (246,078)
Income (loss) before provision for income taxes...... 556,709 (50,893)
Provision for income taxes........................... 148,068 --
----------- -----------
Net income (loss).................................... 408,641 (50,893)
Retained earnings, beginning of period............... 1,184,438 1,593,079
----------- -----------
Retained earnings, end of year....................... $ 1,593,079 $ 1,542,186
=========== ===========
</TABLE>
The notes to the consolidated financial statements
are an integral part of this statement.
F-25
<PAGE>
RED RIVER MARINE, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30
------------------------
1994 1995
----------- -----------
<S> <C> <C>
Cash flows from operating activities
Net income (loss).................................. $ 408,641 $ (50,893)
Adjustment to reconcile net income (loss) to net
cash provided (used) by operating activities:
Depreciation..................................... 63,013 67,893
Deferred income taxes............................ (990) (11,025)
Gain on sale of assets........................... -- (10,575)
(Increase) decrease in:
Accounts receivable.............................. (386) (7,832)
Inventory........................................ (614,598) 2,698,098
Notes receivable................................. -- (801,073)
Prepaid expenses and other assets................ 18,554 (10,998)
Increase (decrease) in:
Trade accounts payable........................... 44,513 (74,919)
Notes payable--floor plan........................ 181,985 (1,821,723)
Other current liabilities........................ (402) (17,683)
Income taxes payable............................. 107,684 (117,112)
Accrued salaries and commissions................. 27,987 (43,250)
----------- -----------
Net cash provided (used) by operating activi-
ties.......................................... 236,001 (201,092)
Cash flows from investing activities:
Purchase of equipment.............................. (56,360) --
Net proceeds from sale of assets................... -- 465,377
----------- -----------
Net cash provided (used) by investing activi-
ties............................................ (56,360) 465,377
Cash flows from financing activities:
Decrease in financing reserves..................... 50,894 33,776
Reduction in notes payable......................... (57,501) (223,172)
----------- -----------
Net cash used by financing activities............ (6,607) (189,396)
Net increase in cash................................. $ 173,034 $ 74,889
Cash, beginning of year.............................. 1,032,306 1,205,340
----------- -----------
Cash, end of year.................................... $ 1,205,340 $ 1,280,229
=========== ===========
Supplemental cash flow information
Cash paid for interest............................. $ 221,219 $ 330,479
=========== ===========
Cash paid for income taxes......................... $ 41,374 $ 117,112
=========== ===========
</TABLE>
The notes to the consolidated financial statements are an integral part of this
statement.
F-26
<PAGE>
RED RIVER MARINE, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
The financial statements include the accounts of Red River Marine, Inc. and
its wholly-owned subsidiary Red River Marine, Inc. #2 (the Company). All
intercompany accounts have been eliminated in consolidation. The financial
statements reflect the marine operations through September 20, 1995, the date
of sale as discussed in Note 2.
Depreciation
Depreciation is computed using the straight-line and accelerated methods
over the estimated useful lives of the assets as summarized below:
<TABLE>
<S> <C>
Land Improvements...................... 10 Years
Building and Improvements.............. 10 to 40 Years
Vehicles............................... 3 Years
Furniture and Equipment................ 5 to 10 Years
</TABLE>
Bad Debts
Bad debts are accounted for by the direct write-off method.
NOTE 2--NOTES RECEIVABLE
In September 1995, the Company sold its inventory, certain other assets and
real estate and rights to the use of its name. Payment is to be received at
approximately $30,100 per month including interest at 8.75%.
NOTE 3--PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at September 30, 1995, consists of the
following:
<TABLE>
<S> <C>
Land............................................................ $483,662
Buildings and Leasehold Improvements............................ 364,798
Autos........................................................... 23,835
Land Improvements............................................... 83,315
--------
955,610
Less: Accumulated Depreciation.................................. (228,287)
--------
Total........................................................... $727,323
========
</TABLE>
NOTE 4--LONG-TERM DEBT
Long-term debt at September 30, 1995 is comprised as follows:
<TABLE>
<S> <C>
Heber Springs State Bank 9.5% (Secured by real estate and
guaranteed by FMHA)......................................... $449,582
--------
Total long-term debt......................................... 449,582
Less current portion......................................... (15,638)
--------
$433,944
========
</TABLE>
F-27
<PAGE>
RED RIVER MARINE, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 4--LONG-TERM DEBT (CONTINUED)
Annual maturities of long-term debt are as follows:
<TABLE>
<CAPTION>
YEAR ENDING SEPTEMBER 30,
-------------------------
<S> <C>
1996.......................................................... $ 15,638
1997.......................................................... 17,123
1998.......................................................... 18,750
1999.......................................................... 20,531
2000.......................................................... 22,482
Thereafter.................................................... 355,058
--------
$449,582
========
</TABLE>
NOTE 5--CONTINGENT LIABILITIES
The Company is contingently liable to financial institutions at September
30, 1995 as follows:
<TABLE>
<S> <C>
Heber Springs State Bank....................................... $210,356
First Commercial Bank.......................................... 743,294
--------
Total........................................................ $953,650
========
</TABLE>
These contingent liabilities are a result of financing agreements with
recourse on boat sales financed by the above financial institutions.
NOTE 6--FUTURE OPERATIONS
Red River Marine, Inc., as noted in Note 2, sold its inventory, certain
other assets and real estate and right to the use of its name to Travis
Boating Centers, Inc. The management of Red River Marine, Inc. and its
operating policies and procedures will not continue in the future. Therefore,
the degree of success that Travis Boats & Motors, Inc. will experience in the
market area of Red River Marine, Inc. will be totally dependent upon the
skills of the Travis Boats & Motors, Inc. management of the Red River Marine
stores.
F-28
<PAGE>
[INSIDE BACK COVER]
Photos of storefronts, store interiors, Travis Edition boat packages.
<PAGE>
[OUTSIDE BACK COVER]
[CORPORATE LOGO]
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following sets forth expenses and costs (other than underwriting
discounts and commissions) expected to be incurred in connection with the
issuance and distribution of the shares offered hereby:
<TABLE>
<S> <C>
Commission registration fee......................................... $9,022
------
NASD filing fee..................................................... 3,117
------
Nasdaq Stock Market................................................. *
Accounting fees and expenses........................................ *
Legal fees and expenses............................................. *
Blue sky fees and expenses (including fees and expenses of
counsel)........................................................... *
Printing and engraving fees and expenses............................ *
Fees of transfer agent and registrar................................ *
Miscellaneous....................................................... *
------
Total........................................................... $ *
======
</TABLE>
- --------
* To be supplied by amendment.
All of the foregoing, except the Commission registration fee and the NASD
filing fee, are estimated.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant has authority under Articles 2.02A.(16) and 2.02-1 of the
Texas Business Corporation Act (the "TBCA") to indemnify its directors and
officers to the extent provided for in such statute. The Registrant's articles
of incorporation permit indemnification of directors and officers to the
fullest extent permitted by law.
The TBCA provides in part that a corporation may indemnify a director or
officer or other person who was, is, or is threatened to be made a named
defendant or respondent in a proceeding because the person is or was a
director, officer, employee or agent of the corporation, if it is determined
that (i) such person conducted himself in good faith; (ii) reasonably
believed, in the case of conduct in his official capacity as a director or
officer of the corporation, that his conduct was in the corporation's best
interests, and, in all other cases, that his conduct was at least not opposed
to the corporation's best interest; and (iii) in the case of any criminal
proceeding, had no reasonable cause to believe that his conduct was unlawful.
A corporation may indemnify a person under the TBCA against judgments,
penalties (including excise and similar taxes), fines, settlement, and
reasonable expenses actually incurred by the person in connection with the
proceeding. If the person is found liable to the corporation or is found
liable on the basis that personal benefit was improperly received by the
person, the indemnification is limited to reasonable expenses actually
incurred by the person in connection with the proceeding, and shall not be
made in respect of any proceeding in which the person shall have been found
liable for willful or intentional misconduct in the performance of his duty to
the corporation.
A corporation may also pay or reimburse expenses incurred by a person in
connection with his appearance as a witness or other participation in a
proceeding at a time when he is not a named defendant or respondent in the
proceeding.
Reference is also made to the articles of incorporation, which limit or
eliminate a director's liability for monetary damages to the Registrant or its
stockholders for acts or omissions in the director's capacity as a director,
except that the articles of incorporation do not eliminate the liability of a
director for (i) a breach of the
II-1
<PAGE>
director's duty of loyalty to the Registrant or its stockholders, (ii) an act
or omission not in good faith that constitutes a breach of duty of the
director to the Registrant or an act or omission that involves intentional
misconduct or a knowing violation of the law, (iii) a transaction from which a
director received an improper benefit, whether or not the benefit resulted
from an action taken within the scope of the director's office, or (iv) an act
or omission for which the liability of a director is expressly provided for by
an applicable statute.
Reference is made to Section 8 of the Form of Underwriting Agreement
contained as Exhibit 1.1 which provides for indemnification by the
Underwriters of the directors and officers of the Registrant signing the
Registration Statement and certain controlling persons of the Registrant
against certain liabilities, including those arising under the Securities Act
in certain instances.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
All references to numbers of shares and per share prices give effect to the
stock split to be effected prior to the closing of this offering unless
otherwise indicated.
Within the past three years, the Registrant has sold the following
securities which were not registered under the Securities Act:
(1) On March 1, 1993, the Company issued 4,267 shares of Common Stock to
Michael B. Perrine, the Company's Chief Financial Officer, Secretary and
Treasurer, in lieu of a $4,000 cash bonus payable with respect to the
Company's fiscal year 1992. This transaction was exempt from the
registration requirements of the Securities Act pursuant to Section 4(2)
thereunder.
(2) On March 31, 1994, the Company issued 41,707 shares of Common Stock
to Ronnie L. Spradling in lieu of a $40,000 cash bonus payable with respect
to the Company's fiscal year 1993. This transaction was exempt from the
registration requirements of the Securities Act pursuant to Section 4(2)
thereunder.
(3) On April 30, 1994, the Company issued 11,691 shares of Common Stock
to Billy Breed in lieu of a $11,212 cash payment payable to Mr. Breed in
connection with an agreement entered into between the Company and Mr. Breed
in 1989. This transaction was exempt from the registration requirements of
the Securities Act pursuant to Section 4(2) thereunder.
(4) On September 30, 1994, the Company issued 6,400 shares of Common
Stock to J. Brooks Rainer, the Company's controller and tax manager, in
exchange for $6,834. This transaction was exempt from the registration
requirements of the Securities Act pursuant to Section 4(2) thereunder.
(5) On September 30, 1994, the Company issued 3,200 shares of Common
Stock to Michael B. Perrine, the Company's Chief Financial Officer,
Secretary and Treasurer, in exchange for $3,069. This transaction was
exempt from the registration requirements of the Securities Act pursuant to
Section 4(2) thereunder.
(6) On October 18, 1994, the Company issued 8,533 shares of Common Stock
to Kelly Harber in exchange for $8,184. This transaction was exempt from
the registration requirements of the Securities Act pursuant to Section
4(2) thereunder.
(7) As of December 31, 1994, the Company agreed to sell stock to selected
employees. Pursuant to this arrangement, the Company sold a total of 47,637
shares to six persons for a total consideration of $72,318 between March 1
and June 30, 1995. These transactions were exempt from the registration
requirements of the Securities Act pursuant to Section 4(2) and Rule 701
thereunder.
(8) In May 1995, the Company granted nonstatutory stock options to
purchase 20,267, 46,933 and 66,667 shares of Common Stock to Mark T.
Walton, Ronnie L. Spradling and Michael B. Perrine, respectively, at an
exercise price of $5.25 per share. Such options vest over a period of five
years, at a cumulative rate of 20% per year. The initial 20% vests on May
17, 1996. This transaction was exempt from the registration requirements of
the Securities Act pursuant to Section 4(2) and Rule 701 thereunder.
II-2
<PAGE>
(9) On November 8, 1995, the Company declared a 15-for-1 stock dividend.
This transaction was exempt from the registration requirements as not
involving any "sale," "offer," or "offer to sell" within the meaning of
Section 2(3) of the Securities Act.
(10) On May 3, 1996, the Company declared a one for three stock dividend.
This transaction was exempt from the registration requirements as not
involving any "sale," "offer," or "offer to sell" within the meaning of
Section 2(3) of the Securities Act.
The securities referred to above as having been issued in reliance on the
exemption from registration under Section 4(2) of the Securities Act were
subject to restrictions on transfer and appropriate restrictive legends were
affixed to the certificates or instruments issued in each transaction. All
recipients were furnished with, or had adequate access to, information
regarding the Registrant and all recipients represented that they were
"accredited investors" as that term is defined in Rule 501 of Regulation D
promulgated by the Securities and Exchange Commission pursuant to the
Securities Act.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits:
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement.
3.1 Restated Articles of Incorporation of the Registrant, as amended.
3.2 Restated Bylaws of the Registrant, as amended.
4.1* Specimen stock certificate evidencing the Common Stock.
5.1* Opinion of Jenkens & Gilchrist, A Professional Corporation.
10.1(a) Stock Restriction Agreement dated as of January 1, 1992, among the
stockholders of the Company and the Company.
10.1(b) First Modification to That Certain Stock Transfer and Restriction
Agreement Originally Dated as of Jan. 1, 1992 dated as of January
2, 1995.
10.1(c) Second Amendment to Stock Transfer Restriction and Voting
Agreement dated as of December 14, 1995, among the stockholders
of the Company and the Company.
10.2(a)*+ Agreement dated as of August 11, 1995, between the Company and
Outboard Marine Corporation.
10.2(b) Dealer Agreement dated as of October 13, 1995, between the Company
and Outboard Marine Corporation.
10.3*+ Dealer Agreement dated as of August 17, 1995, between the Company
and Larson Boats, a division of Larson/Glastron Boats, Inc., a
subsidiary of Genmar Industries, Inc.
10.4*+ Dealer Agreement dated as of August 17, 1995, between the Company
and Mastercrafters Corporation.
10.5(a) Inventory Security Agreement and Power of Attorney dated as of
November 30, 1993, between Bombardier Capital Inc. and the
Company.
10.5(b) Inventory Security Agreement and Power of Attorney dated as of
November 30, 1993, between Bombardier Capital Inc. and Falcon
Marine Abilene, Inc.
10.6(a) Agreement for Wholesale Financing dated as of August 17, 1995, by
and among Deutsche Financial Services Corporation, the Company
and its subsidiaries; and Amendment to Agreement for Wholesale
Financing dated as of September 22, 1995.
10.6(b) Agreement for Wholesale Financing dated as of August 17, 1995,
between Deutsche Financial Services Corporation and Travis Boats
& Motors Baton Rouge, Inc.
10.7(a) Inventory Loan Agreement dated as of September 20, 1995, between
TBC Arkansas, Inc. and Hibernia National Bank.
10.7(b)* Commercial Security Agreement dated September 1, 1995, between TBC
Arkansas, Inc. and Hibernia National Bank.
10.8(a) Inventory Loan Agreement dated as of December 17, 1992, between
Travis Boats & Motors Baton Rouge, Inc. and Hibernia National
Bank; and First Amendment to Inventory Loan Agreement dated as of
February 7, 1994.
10.8(b)* Promissory Note dated May 30, 1995, in the original principal
amount of $100,000, payable by Travis Boats & Motors Baton Rouge,
Inc. to Hibernia National Bank.
</TABLE>
II-3
<PAGE>
<TABLE>
<C> <S>
10.8(c)* Promissory Note dated May 30, 1995, in the original principal
amount of $800,000, payable by Travis Boats & Motors Baton Rouge,
Inc. to Hibernia National Bank.
10.8(d)* Promissory Note dated July 14, 1995, in the original principal
amount of $480,000, payable by Travis Boats & Motors Baton Rouge,
Inc. to Hibernia National Bank.
10.8(e)* Business Loan Agreement dated July 14, 1995, between Travis Boats
& Motors Baton Rouge, Inc. and Hibernia National Bank.
10.8(f)* Commercial Security Agreement dated July 14, 1995, between Travis
Boats & Motors Baton Rouge, Inc. and Hibernia National Bank.
10.8(g)* Collateral Mortgage dated July 14, 1995, from Travis Boats &
Motors Baton Rouge, Inc. to Hibernia National Bank.
10.8(h)* Assignment of Leases and Rents dated July 14, 1995, between Travis
Boats & Motors Baton Rouge, Inc. and Hibernia National Bank.
10.8(i)* Pledge of Collateral Mortgage Note dated July 14, 1995, from
Travis Boats & Motors Baton Rouge, Inc. to Hibernia National
Bank.
10.9(a)* Promissory Note dated September 1, 1995, in the original principal
amount of $3,000,000, payable by TBC Arkansas, Inc. to Hibernia
National Bank.
10.9(b)* Commercial Guaranty dated September 1, 1995 by the Company in
favor of Hibernia National Bank guarantying a $3,000,000
Promissory Note.
10.9(c)* Promissory Note dated September 1, 1995, in the original principal
amount of $250,000, payable by TBC Arkansas to Hibernia National
Bank.
10.10(a) Amended and Restated Loan Agreement dated as of September 15,
1995, by and among NationsBank of Texas, N.A., the Company and
its subsidiaries.
10.10(b)* Security Agreement dated July 31, 1995, by and among NationsBank
of Texas, N.A., the Company and its subsidiaries.
10.11 General Promissory Note dated August 31, 1995, in the original
principal amount of $300,000, payable by the Company to Amerisure
Property & Casualty, Ltd.
10.12 General Promissory Note dated August 31, 1995, in the original
principal amount of $100,000, payable by the Company to Capitol
Commerce Reporter, Inc.
10.13 General Promissory Note dated August 31, 1995, in the original
principal amount of $75,000, payable by the Company to Capitol
Commerce Reporter, Inc.
10.14 General Promissory Note dated August 31, 1995, in the original
principal amount of $150,000, payable by the Company to Joe
Simpson and Pat Simpson.
10.15* Asset Purchase Agreement dated as of September 20, 1995, by and
among Red River Marine, Inc., Red River Marine, Inc. #2, and TBC
Arkansas, Inc.
10.16* Promissory Note dated September 20, 1995, in the original
principal amount of $800,000, payable by TBC Arkansas, Inc. to
Benny Hargrove.
10.17(a)* Promissory Note dated as of September 20, 1995, in the original
principal amount of $462,145.53, payable by TBC Arkansas, Inc. to
Red River Marine, Inc. #2.
10.17(b)* Mortgage With Power of Sale (Realty) dated September 20, 1995,
from TBC Arkansas, Inc. to Red River Marine, Inc. #2.
10.18* Promissory Note dated September 20, 1995, in the original
principal amount of $230,177.16, payable by TBC Arkansas, Inc. to
Red River Marine, Inc. and Red River Marine, Inc. #2.
10.19* Promissory Note dated September 20, 1995, in the original
principal amount of $108,750, payable by TBC Arkansas, Inc. to
Red River Marine, Inc. and Red River Marine, Inc. #2.
10.20 Travis Boats and Motors, Inc. 1995 Incentive Plan.
10.21* Form of Amended and Restated Employment Agreement dated May 7,
1996, between the Company and Mark T. Walton, Ronnie L. Spradling
and Michael B. Perrine.
10.22* Form of Option Agreement dated May 17, 1995, between the Company
and Michael B. Perrine, Ronnie L. Spradling and Mark T. Walton.
10.23 Form of Indemnification Agreement for Directors and Officers of
the Company.
</TABLE>
II-4
<PAGE>
<TABLE>
<C> <S>
10.24 Management Agreement dated December 14, 1995, by and among TBC
Management, Ltd., the Company and its subsidiaries.
10.25 [Intentionally left blank]
10.26(a)* First Lien Promissory Note dated September 15, 1995, in the
original principal amount of $679,000, payable by Travis Snowden
Marine, Inc. to NationsBank of Texas, N.A.
10.26(b)* Second Lien Promissory Note dated September 15, 1995, in the
original principal amount of $311,000, payable by Travis Snowden
Marine, Inc. to NationsBank of Texas, N.A.
10.26(c)* First Lien Deed of Trust, Assignment, Security Agreement and
Financing Statement dated September 15, 1995, from Travis Snowden
Marine, Inc. to Michael F. Hord, Trustee.
10.26(d)* Second Lien Deed of Trust, Assignment, Security Agreement and
Financing Statement dated September 15, 1995, from Travis Snowden
Marine, Inc. to Michael F. Hord, Trustee.
10.27(a)* Second Modification and Extension Agreement dated April 26, 1994,
between the Company and NationsBank of Texas, N.A.
10.27(b)* "504" Note dated April 28, 1994, in the original principal amount
of $454,000, payable by the Company to Cen-Tex Certified
Development Corporation.
10.27(c)* Deed of Trust, Assignment, Security Agreement and Financing
Statement dated March 5, 1993, from the Company to Michael F.
Hord, Trustee.
10.27(d)* Deed of Trust dated April 28, 1994, from the Company to Wm. H.
Harrison, Jr., Trustee.
10.28* Trust Agreement dated December 31, 1994, by and among Ideal
Insurance Company, Ltd. and the Company.
21.1 List of subsidiaries of the Registrant.
23.1* Consent of Jenkens & Gilchrist, A Professional Corporation
(included in their opinion filed as Exhibit 5.1).
23.2 Consent of Ernst & Young, LLP.
23.3 Consent of Turner, Burkett & Ring, P.A.
23.4 Consent of Devona Jeffery, L.L.C.
24.1 Power of Attorney (contained on the signature page of this
Registration Statement).
27 Financial Data Schedule.
99(a) Consent of Steve Gurasich.
99(b) Consent of Zach McClendon, Jr.
</TABLE>
- --------
* To be filed by amendment.
+ Portions of this exhibit have been omitted and are subject to an application
for confidential treatment filed separately with the Commission.
(b) Financial Statement Schedules: None.
II-5
<PAGE>
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes to provide to the Underwriters,
at the closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the Securities Act or otherwise, the Registrant has
been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of Prospectus filed as part of the
Registration Statement in reliance upon Rule 430A and contained in the form
of Prospectus filed by the Registrant pursuant to Rule 424(b) (1) or (4) or
497(h) under the Securities Act shall be deemed to be part of the
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of Prospectus shall
be deemed to be a new Registration Statement relating to the securities
offered herein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Austin,
State of Texas, on May 7, 1996.
Travis Boats & Motors, Inc.
/s/ Mark T. Walton
By: _________________________________
MARK T. WALTON Chairman of the
Board and President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Mark T. Walton and Michael B. Perrine,
and each of them, each with full power to act without the other, his true and
lawful attorneys-in-fact and agents, each with full power of substitution and
resubstitution for him and his name, place and stead, in any and all
capacities, to sign any or all amendments to this Registration Statement
(including post-effective amendments), and to file the same with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto each of said attorneys-in-fact and agents
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully to all
intents and purposes as he might or could do in person hereby ratifying and
confirming that each of said attorneys-in-fact and agents or his substitutes
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities on the dates indicated:
SIGNATURE TITLE DATE
/s/ Mark T. Walton Chairman of the May 7, 1996
- ------------------------------------- Board and President
MARK T. WALTON (Principal
Executive Officer)
Executive Vice , 1996
- ------------------------------------- President--New
RONNIE L. SPRADLING Store Development
and Director
/s/ Michael B. Perrine Chief Financial May 7, 1996
- ------------------------------------- Officer (Principal
MICHAEL B. PERRINE Accounting and
Financial Officer)
/s/ E. D. Bohls Director May 7, 1996
- -------------------------------------
E.D. BOHLS
/s/ Robert C. Siddons Director May 7, 1996
- -------------------------------------
ROBERT C. SIDDONS
/s/ Joseph E. Simpson Director May 7, 1996
- -------------------------------------
JOSEPH E. SIMPSON
II-7
<PAGE>
EXHIBIT 1.1
1,750,000 SHARES/1/
TRAVIS BOATS & MOTORS, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
----------------------
_________ ___, 1996
ROBERTSON, STEPHENS & COMPANY LLC
PRINCIPAL FINANCIAL SECURITIES, INC.
As Representatives of the several Underwriters
c/o Robertson, Stephens & Company LLC
555 California Street
Suite 2600
San Francisco, California 94104
Ladies/Gentlemen:
Travis Boats & Motors, Inc., a Texas corporation (the "Company"), and
certain shareholders of the Company named in Schedule B hereto (hereafter called
the "Selling Shareholders") address you as the Representatives of each of the
persons, firms and corporations listed in Schedule A hereto (herein collectively
called the "Underwriters") and hereby confirm their respective agreements with
the several Underwriters as follows:
1. Description of Shares. The Company proposes to issue and sell 1,312,500
---------------------
shares of its authorized and unissued Common Stock, par value $.01 per share, to
the several Underwriters. The Selling Shareholders, acting severally and not
jointly, propose to sell an aggregate of 437,500 shares of the Company's
authorized and outstanding Common Stock, par value $.01 per share, to the
several Underwriters. The 1,312,500 shares of Common Stock, par value $.01 per
share, of the Company to be sold by the Company are hereinafter called the
"Company Shares" and the 437,500 shares of Common Stock, par value $.01 per
share, to be sold by the Selling Shareholders are hereinafter called the
"Selling Shareholder Shares." The Company Shares and the Selling Shareholder
Shares are hereinafter collectively referred to as the "Firm Shares." The
Company and certain Selling Shareholders also propose to grant, severally and
not jointly, to the Underwriters an option to purchase up to 262,500 additional
shares of the Company's Common Stock, par value $.01 per share (the "Option
Shares"), as provided in Section 7 hereof. As used in this Agreement, the term
"Shares" shall include the Firm Shares and the Option Shares. All shares of
Common Stock, par value $.01 per share, of the Company to be outstanding after
giving effect to the sales contemplated hereby, including the Shares, are
hereinafter referred to as "Common Stock."
2. Representations, Warranties and Agreements of the Company and the
-----------------------------------------------------------------
Selling Shareholders.
- --------------------
- ----------
/1/ Plus an option to purchase up to 262,500 additional shares from the
Company and certain shareholders of the Company to cover over-allotments.
<PAGE>
I. The Company and each Selling Shareholder listed in Schedule B
hereto, severally and not jointly, represents and warrants to and agrees with
each Underwriter that:
(a) A registration statement on Form S-1 (File No. 333-_____) with
respect to the Shares, including a prospectus subject to completion, has been
prepared by the Company in conformity with the requirements of the Securities
Act of 1933, as amended (the "Act"), and the applicable rules and regulations
(the "Rules and Regulations") of the Securities and Exchange Commission (the
"Commission") under the Act and has been filed with the Commission; such
amendments to such registration statement, such amended prospectuses subject to
completion and such abbreviated registration statements pursuant to Rule 462(b)
of the Rules and Regulations as may have been required prior to the date hereof
have been similarly prepared and filed with the Commission; and the Company will
file such additional amendments to such registration statement, such amended
prospectuses subject to completion and such abbreviated registration statements
as may hereafter be required. Copies of such registration statement and
amendments, of each related prospectus subject to completion (the "Preliminary
Prospectuses") and of any abbreviated registration statement pursuant to Rule
462(b) of the Rules and Regulations have been delivered to you.
If the registration statement relating to the Shares has been declared
effective under the Act by the Commission, the Company will prepare and promptly
file with the Commission the information omitted from the registration statement
pursuant to Rule 430A(a) or, if Robertson, Stephens & Company LLC, on behalf of
the several Underwriters, shall agree to the utilization of Rule 434 of the
Rules and Regulations, the information required to be included in any term sheet
filed pursuant to Rule 434(b) or (c), as applicable, of the Rules and
Regulations pursuant to subparagraph (1), (4) or (7) of Rule 424(b) of the Rules
and Regulations or as part of a post-effective amendment to the registration
statement (including a final form of prospectus). If the registration statement
relating to the Shares has not been declared effective under the Act by the
Commission, the Company will prepare and promptly file an amendment to the
registration statement, including a final form of prospectus, or, if Robertson,
Stephens & Company LLC, on behalf of the several Underwriters, shall agree to
the utilization of Rule 434 of the Rules and Regulations, the information
required to be included in any term sheet filed pursuant to Rule 434(b) or (c),
as applicable, of the Rules and Regulations. The term "Registration Statement"
as used in this Agreement shall mean such registration statement, including
financial statements, schedules and exhibits, in the form in which it became or
becomes, as the case may be, effective (including, if the Company omitted
information from the registration statement pursuant to Rule 430A(a), or if the
Company files a term sheet pursuant to Rule 434 of the Rules and Regulations,
the information deemed to be a part of the registration statement at the time it
became effective pursuant to Rule 430A(b) or Rule 434(d) of the Rules and
Regulations) and, in the event of any amendment thereto or the filing of any
abbreviated registration statement pursuant to Rule 462(b) of the Rules and
Regulations relating thereto after the effective date of such registration
statement, shall also mean (from and after the effectiveness of such amendment
or the filing of such abbreviated registration statement) such registration
statement as so amended, together with any such abbreviated registration
statement. The term "Prospectus" as used in this Agreement shall mean the
prospectus relating to the Shares as included in such Registration Statement at
the time it becomes effective (including, if the Company omitted information
from the Registration Statement pursuant to Rule 430A(a) of the Rules and
Regulations, the information deemed to be a part of the Registration Statement
at the time it became effective pursuant to Rule 430A(b) of the Rules and
Regulations); provided, however, that if in reliance on Rule 434 of the Rules
-------- -------
and Regulations and with the consent of Robertson, Stephens & Company LLC, on
behalf of the several Underwriters, the Company shall have provided to the
Underwriters a term sheet pursuant to Rule 434(b) or (c), as applicable, prior
to the time that a confirmation is sent or given for purposes of Section
2(10)(a) of the Act, the term "Prospectus" shall mean the "prospectus subject to
completion" (as defined in Rule 434(g) of the Rules and Regulations) last
provided to the Underwriters by the Company and circulated by the Underwriters
to all prospective purchasers of the Shares (including the information deemed to
be a part of the Registration Statement at the time it became effective pursuant
to Rule 434(d) of the Rules and Regulations). Notwithstanding the foregoing, if
any revised prospectus shall be provided to the Underwriters by the Company for
use in connection with the offering of the Shares that differs from the
prospectus referred to in the immediately preceding sentence (whether or not
such revised prospectus is required to be filed with the Commission pursuant to
Rule 424(b) of the Rules and Regulations), the term "Prospectus" shall refer to
such revised prospectus from and after the time it is first provided to the
Underwriters for such use. If in reliance on Rule 434 of the Rules and
Regulations and with the consent of
-2-
<PAGE>
Robertson, Stephens & Company LLC, on behalf of the several Underwriters, the
Company shall have provided to the Underwriters a term sheet pursuant to Rule
434(b) or (c), as applicable, prior to the time that a confirmation is sent or
given for purposes of Section 2(10)(a) of the Act, the Prospectus and the term
sheet, together, will not be materially different from the prospectus in the
Registration Statement.
(b) The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus or instituted proceedings for that
purpose, and each such Preliminary Prospectus has conformed in all material
respects to the requirements of the Act and the Rules and Regulations and, as of
its date, has not included any untrue statement of a material fact or omitted to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; and at the time
the Registration Statement became or becomes, as the case may be, effective and
at all times subsequent thereto up to and on the Closing Date (hereinafter
defined) and on any later date on which Option Shares are to be purchased, (i)
the Registration Statement and the Prospectus, and any amendments or supplements
thereto, contained and will contain all material information required to be
included therein by the Act and the Rules and Regulations and will in all
material respects conform to the requirements of the Act and the Rules and
Regulations, (ii) the Registration Statement, and any amendments or supplements
thereto, did not and will not include any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading, and (iii) the Prospectus, and any
amendments or supplements thereto, did not and will not include any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that none of the representations and
-------- -------
warranties contained in this subparagraph (b) shall apply to information
contained in or omitted from the Registration Statement or Prospectus, or any
amendment or supplement thereto, in reliance upon, and in conformity with,
written information relating to any Underwriter furnished to the Company by such
Underwriter specifically for use in the preparation thereof.
(c) Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation with full power and authority
(corporate and other) to own, lease and operate its properties and conduct its
business as described in the Prospectus; the Company owns all of the outstanding
capital stock of its subsidiaries free and clear of any pledge, lien, security
interest, encumbrance, claim or equitable interest; each of the Company and its
subsidiaries is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction in which the ownership or leasing of its
properties or the conduct of its business requires such qualification, except
where the failure to be so qualified or be in good standing would not have a
material adverse effect on the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company and its subsidiaries
considered as one enterprise; no proceeding has been instituted in any such
jurisdiction, revoking, limiting or curtailing, or seeking to revoke, limit or
curtail, such power and authority or qualification; each of the Company and its
subsidiaries is in possession of and operating in compliance with all
authorizations, licenses, certificates, consents, orders and permits from state,
federal and other regulatory authorities which are material to the conduct of
its business, all of which are valid and in full force and effect; neither the
Company nor any of its subsidiaries is in violation of its respective charter or
bylaws or in default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any material bond,
debenture, note or other evidence of indebtedness, or in any material lease,
contract, indenture, mortgage, deed of trust, loan agreement, joint venture or
other agreement or instrument to which the Company or any of its subsidiaries is
a party or by which it or any of its subsidiaries or their respective properties
may be bound; and neither the Company nor any of its subsidiaries is in material
violation of any law, order, rule, regulation, writ, injunction, judgment or
decree of any court, government or governmental agency or body, domestic or
foreign, having jurisdiction over the Company or any of its subsidiaries or over
their respective properties of which it has knowledge. The Company does not own
or control, directly or indirectly, any corporation, association or other entity
other than [list subsidiaries].
(d) The Company has full legal right, power and authority to enter
into this Agreement and perform the transactions contemplated hereby. This
Agreement has been duly authorized, executed and delivered by the Company and is
a valid and binding agreement on the part of the Company, enforceable in
accordance with
-3-
<PAGE>
its terms, except as rights to indemnification hereunder may be limited by
applicable law and except as the enforcement hereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting creditors' rights generally or by general equitable
principles; the performance of this Agreement and the consummation of the
transactions herein contemplated will not result in a material breach or
violation of any of the terms and provisions of, or constitute a default under,
(i) any bond, debenture, note or other evidence of indebtedness, or under any
lease, contract, indenture, mortgage, deed of trust, loan agreement, joint
venture or other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which it or any of its subsidiaries or their
respective properties may be bound, (ii) the charter or bylaws of the Company or
any of its subsidiaries, or (iii) any law, order, rule, regulation, writ,
injunction, judgment or decree of any court, government or governmental agency
or body, domestic or foreign, having jurisdiction over the Company or any of its
subsidiaries or over their respective properties. No consent, approval,
authorization or order of or qualification with any court, government or
governmental agency or body, domestic or foreign, having jurisdiction over the
Company or any of its subsidiaries or over their respective properties is
required for the execution and delivery of this Agreement and the consummation
by the Company or any of its subsidiaries of the transactions herein
contemplated, except such as may be required under the Act, the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or under state or other
securities or Blue Sky laws, all of which requirements have been satisfied in
all material respects.
(e) There is not any pending or, to the best of the Company's
knowledge, threatened action, suit, claim or proceeding against the Company, any
of its subsidiaries or any of their respective officers or any of their
respective properties, assets or rights before any court, government or
governmental agency or body, domestic or foreign, having jurisdiction over the
Company or any of its subsidiaries or over their respective officers or
properties or otherwise which (i) might result in any material adverse change in
the condition (financial or otherwise), earnings, operations, business or
business prospects of the Company and its subsidiaries considered as one
enterprise or might materially and adversely affect their properties, assets or
rights, (ii) might prevent consummation of the transactions contemplated hereby
or (iii) is required to be disclosed in the Registration Statement or Prospectus
and is not so disclosed; and there are no agreements, contracts, leases or
documents of the Company or any of its subsidiaries of a character required to
be described or referred to in the Registration Statement or Prospectus or to be
filed as an exhibit to the Registration Statement by the Act or the Rules and
Regulations which have not been accurately described in all material respects in
the Registration Statement or Prospectus or filed as exhibits to the
Registration Statement.
(f) All outstanding shares of capital stock of the Company (including
the Selling Shareholder Shares) have been duly authorized and validly issued and
are fully paid and nonassessable, have been issued in compliance with all
federal and state securities laws, were not issued in violation of or subject to
any preemptive rights or other rights to subscribe for or purchase securities,
and the authorized and outstanding capital stock of the Company is as set forth
in the Prospectus under the caption "Capitalization" and conforms in all
material respects to the statements relating thereto contained in the
Registration Statement and the Prospectus (and such statements correctly state
the substance of the instruments defining the capitalization of the Company);
the Company Shares and the Option Shares to be purchased from the Company
hereunder have been duly authorized for issuance and sale to the Underwriters
pursuant to this Agreement and, when issued and delivered by the Company against
payment therefor in accordance with the terms of this Agreement, will be duly
and validly issued and fully paid and nonassessable, and will be sold free and
clear of any pledge, lien, security interest, encumbrance, claim or equitable
interest; and no preemptive right, co-sale right, registration right, right of
first refusal or other similar right of shareholders exists with respect to any
of the Company Shares or Option Shares to be purchased from the Company
hereunder or the issuance and sale thereof other than those that have been
expressly waived prior to the date hereof and those that will automatically
expire upon the consummation of the transactions contemplated on the Closing
Date. No further approval or authorization of any shareholder, the Board of
Directors of the Company or others is required for the issuance and sale or
transfer of the Shares except as may be required under the Act or under state or
other securities or Blue Sky laws. All issued and outstanding shares of capital
stock of each subsidiary of the Company have been duly authorized and validly
issued and are fully paid and nonassessable, and were not issued in violation of
or subject to any preemptive right, or other rights to subscribe for or purchase
shares and are owned by the
-4-
<PAGE>
Company free and clear of any pledge, lien, security interest, encumbrance,
claim or equitable interest. Except as disclosed in the Prospectus and the
financial statements of the Company, and the related notes thereto, included in
the Prospectus, neither the Company nor any subsidiary has outstanding any
options to purchase, or any preemptive rights or other rights to subscribe for
or to purchase, any securities or obligations convertible into, or any contracts
or commitments to issue or sell, shares of its capital stock or any such
options, rights, convertible securities or obligations. The description of the
Company's stock option, stock bonus and other stock plans or arrangements, and
the options or other rights granted and exercised thereunder, set forth in the
Prospectus accurately and fairly presents the information required to be shown
with respect to such plans, arrangements, options and rights.
(g) Ernst & Young LLP, which has examined the consolidated financial
statements of the Company, together with the related schedules and notes, as of
September 30, 1995 and for its fiscal years ended September 30, 1995 and
December 31, 1994, respectively, filed with the Commission as a part of the
Registration Statement, which are included in the Prospectus, are independent
accountants within the meaning of the Act and the Rules and Regulations; the
audited consolidated financial statements of the Company, together with the
related schedules and notes, and the unaudited consolidated financial
information, forming part of the Registration Statement and Prospectus, fairly
present the financial position and the results of operations of the Company and
its subsidiaries at the respective dates and for the respective periods to which
they apply; and all audited consolidated financial statements of the Company,
together with the related schedules and notes, and the unaudited consolidated
financial information, filed with the Commission as part of the Registration
Statement, have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved except as may be
otherwise stated therein. The selected and summary financial and statistical
data included in the Registration Statement present fairly the information shown
therein and have been compiled on a basis consistent with the audited financial
statements presented therein. No other financial statements or schedules are
required to be included in the Registration Statement.
(h) Devona Jeffery, L.L.C., which has examined the consolidated
financial statements of the Company, together with the related schedules and
notes, as of December 31, 1993 and for its fiscal year ended December 31, 1993,
filed with the Commission as a part of the Registration Statement, which are
included in the Prospectus, are independent accountants within the meaning of
the Act and the Rules and Regulations; the audited consolidated financial
statements of the Company, together with the related schedules and notes, and
the unaudited consolidated financial information, forming part of the
Registration Statement and Prospectus, fairly present the financial position and
the results of operations of the Company and its subsidiaries at the respective
dates and for the respective periods to which they apply; and all audited
consolidated financial statements of the Company, together with the related
schedules and notes, and the unaudited consolidated financial information, filed
with the Commission as part of the Registration Statement, have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved except as may be otherwise stated therein. The
selected and summary financial and statistical data included in the Registration
Statement present fairly the information shown therein and have been compiled on
a basis consistent with the audited financial statements presented therein. No
other financial statements or schedules are required to be included in the
Registration Statement.
(i) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus, there has not been (i) any
material adverse change in the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company and its subsidiaries
considered as one enterprise, (ii) any transaction that is material to the
Company and its subsidiaries considered as one enterprise, except transactions
entered into in the ordinary course of business, (iii) any obligation, direct or
contingent, that is material to the Company and its subsidiaries considered as
one enterprise, incurred by the Company or its subsidiaries, except obligations
incurred in the ordinary course of business, (iv) any change in the capital
stock or outstanding indebtedness of the Company or any of its subsidiaries that
is material to the Company and its subsidiaries considered as one enterprise,
(v) any dividend or distribution of any kind declared, paid or made on the
capital stock of the Company or any of its subsidiaries, or (vi) any loss or
damage (whether or not insured) to the property of the Company or any of its
subsidiaries which has been sustained or will have been sustained which has a
material adverse
-5-
<PAGE>
effect on the condition (financial or otherwise), earnings, operations, business
or business prospects of the Company and its subsidiaries considered as one
enterprise.
(j) Except as set forth in the Registration Statement and Prospectus,
(i) each of the Company and its subsidiaries has good and marketable title to
all properties and assets described in the Registration Statement and Prospectus
as owned by it, free and clear of any pledge, lien, security interest,
encumbrance, claim or equitable interest, other than such as would not have a
material adverse effect on the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company and its subsidiaries
considered as one enterprise, (ii) the agreements to which the Company or any of
its subsidiaries is a party described in the Registration Statement and
Prospectus are valid agreements, enforceable by the Company and its subsidiaries
(as applicable), except as the enforcement thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting creditors' rights generally or by general equitable
principles and, to the best of the Company's knowledge, the other contracting
party or parties thereto are not in material breach or material default under
any of such agreements, and (iii) each of the Company and its subsidiaries has
valid and enforceable leases for all properties described in the Registration
Statement and Prospectus as leased by it, except as the enforcement thereof may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting creditors' rights generally or by
general equitable principles. Except as set forth in the Registration Statement
and Prospectus, the Company owns or leases all such properties as are necessary
to its operations as now conducted or as proposed to be conducted.
(k) The Company and its subsidiaries have timely filed all necessary
federal, state and foreign income and franchise tax returns and have paid all
taxes shown thereon as due, and there is no tax deficiency that has been or, to
the best of the Company's knowledge, might be asserted against the Company or
any of its subsidiaries that might have a material adverse effect on the
condition (financial or otherwise), earnings, operations, business or business
prospects of the Company and its subsidiaries considered as one enterprise; and
all tax liabilities are adequately provided for on the books of the Company and
its subsidiaries.
(l) The Company and its subsidiaries maintain insurance with insurers
of recognized financial responsibility of the types and in the amounts generally
deemed adequate for their respective businesses and consistent with insurance
coverage maintained by similar companies in similar businesses, including, but
not limited to, insurance covering real and personal property owned or leased by
the Company or its subsidiaries against theft, damage, destruction, acts of
vandalism and all other risks customarily insured against, all of which
insurance is in full force and effect; neither the Company nor any such
subsidiary has been refused any insurance coverage sought or applied for; and
neither the Company nor any such subsidiary has any reason to believe that it
will not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that would not materially and
adversely affect the condition (financial or otherwise), earnings, operations,
business or business prospects of the Company and its subsidiaries considered as
one enterprise.
(m) To the best of Company's knowledge, no labor disturbance by the
employees of the Company or any of its subsidiaries exists or is imminent; and
the Company is not aware of any existing or imminent labor disturbance by the
employees of any of its principal suppliers, subassemblers, value added
resellers, subcontractors, authorized dealers or international distributors that
might be expected to result in a material adverse change in the condition
(financial or otherwise), earnings, operations, business or business prospects
of the Company and its subsidiaries considered as one enterprise. No collective
bargaining agreement exists with any of the Company's employees and, to the best
of the Company's knowledge, no such agreement is imminent.
(n) Each of the Company and its subsidiaries owns or possesses
adequate rights to use all patents, patent rights, inventions, trade secrets,
know-how, trademarks, service marks, trade names and copyrights which are
necessary to conduct its businesses as described in the Registration Statement
and Prospectus; the expiration of any patents, patent rights, trade secrets,
trademarks, service marks, trade names or copyrights would not have a material
adverse effect on the condition (financial or otherwise), earnings, operations,
business or business
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<PAGE>
prospects of the Company and its subsidiaries considered as one enterprise; the
Company has not received any notice of, and has no knowledge of, any
infringement of or conflict with asserted rights of the Company by others with
respect to any patent, patent rights, inventions, trade secrets, know-how,
trademarks, service marks, trade names or copyrights; and the Company has not
received any notice of, and has no knowledge of, any infringement of or conflict
with asserted rights of others with respect to any patent, patent rights,
inventions, trade secrets, know-how, trademarks, service marks, trade names or
copyrights which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, might have a material adverse effect on the
condition (financial or otherwise), earnings, operations, business or business
prospects of the Company and its subsidiaries considered as one enterprise.
(o) The Common Stock has been approved for quotation on The Nasdaq
National Market, subject to official notice of issuance.
(p) The Company has been advised concerning the Investment Company Act
of 1940, as amended (the "1940 Act"), and the rules and regulations thereunder,
and has in the past conducted, and intends in the future to conduct, its affairs
in such a manner as to ensure that it will not become an "investment company" or
a company "controlled" by an "investment company" within the meaning of the 1940
Act and such rules and regulations.
(q) The Company has not distributed and will not distribute prior to
the later of (i) the Closing Date, or any date on which Option Shares are to be
purchased, as the case may be, and (ii) completion of the distribution of the
Shares, any offering material in connection with the offering and sale of the
Shares other than any Preliminary Prospectuses, the Prospectus, the Registration
Statement and other materials, if any, permitted by the Act.
(r) Neither the Company nor any of its subsidiaries has at any time
during the last five (5) years (i) made any unlawful contribution to any
candidate for foreign office or failed to disclose fully any contribution in
violation of law, or (ii) made any payment to any federal or state governmental
officer or official, or other person charged with similar public or quasi-public
duties, other than payments required or permitted by the laws of the United
States or any jurisdiction thereof.
(s) The Company has not taken and will not take, directly or
indirectly, any action designed to or that might reasonably be expected to cause
or result in stabilization or manipulation of the price of the Common Stock to
facilitate the sale or resale of the Shares.
(t) Each officer and director of the Company, each Selling Shareholder
and each beneficial owner of shares of Common Stock has agreed in writing that
such person will not, for a period of 180 days commencing from the date that the
Registration Statement is declared effective by the Commission (the "Lock-up
Period"), offer to sell, contract to sell, or otherwise sell, dispose of, loan,
pledge or grant any rights with respect to (collectively, a "Disposition") any
shares of Common Stock, any options or warrants to purchase any shares of Common
Stock or any securities convertible into or exchangeable for shares of Common
Stock (collectively, "Securities") now owned or hereafter acquired directly by
such person or with respect to which such person has or hereafter acquires the
power of disposition, otherwise than (x) as a bona fide gift or gifts, provided
the donee or donees thereof agree in writing to be bound by this restriction,
(y) as a distribution to limited partners or shareholders of such person,
provided that the distributees thereof agree in writing to be bound by the terms
of this restriction, or (z) with the prior written consent of Robertson,
Stephens & Company LLC. The foregoing restriction has been expressly agreed to
preclude the holder of the Securities from engaging in any hedging or other
transaction which is designed to or reasonably expected to lead to or result in
a Disposition of Securities during the Lock-up Period, even if such Securities
would be disposed of by someone other than such holder. Such prohibited hedging
or other transactions would include, without limitation, any short sale (whether
or not against the box) or any purchase, sale or grant of any right (including,
without limitation, any put or call option) with respect to any Securities or
with respect to any security (other than a broad-based market basket or index)
that includes, relates to or derives any significant part of its value from
Securities. Furthermore, such person has also agreed and consented to the entry
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<PAGE>
of stop transfer instructions with the Company's transfer agent against the
transfer of the Securities held by such person except in compliance with this
restriction. The Company has provided to counsel for the Underwriters a
complete and accurate list of all securityholders of the Company and the number
and type of securities held by each securityholder. The Company has provided to
counsel for the Underwriters true, accurate and complete copies of all of the
agreements pursuant to which its officers, directors and shareholders have
agreed to such or similar restrictions (the "Lock-up Agreements") presently in
effect or effected hereby. The Company hereby represents and warrants that it
will not release any of its officers, directors or other shareholders from any
Lock-up Agreements currently existing or hereafter effected without the prior
written consent of Robertson, Stephens & Company LLC.
(u) Except as set forth in the Registration Statement and Prospectus,
(i) the Company is in compliance with all rules, laws and regulations relating
to the use, treatment, storage and disposal of toxic substances and protection
of health or the environment ("Environmental Laws") which are applicable to its
business, (ii) the Company has received no notice from any governmental
authority or third party of an asserted claim under Environmental Laws, which
claim is required to be disclosed in the Registration Statement and the
Prospectus, (iii) the Company will not be required to make future material
capital expenditures to comply with Environmental Laws and (iv) no property
which is owned, leased or occupied by the Company has been designated as a
Superfund site pursuant to the Comprehensive Response, Compensation, and
Liability Act of 1980, as amended (42 U.S.C. (S) 9601, et seq.), or otherwise
-- ----
designated as a contaminated site under applicable state or local law.
(v) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management's general or
specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization, and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(w) There are no outstanding loans, advances (except normal advances
for business expenses in the ordinary course of business) or guarantees of
indebtedness by the Company to or for the benefit of any of the officers or
directors of the Company or any of the members of the families of any of them,
except as disclosed in the Registration Statement and the Prospectus.
(x) The Company has complied with all provisions of Section 517.075,
Florida Statutes relating to doing business with the Government of Cuba or with
any person or affiliate located in Cuba.
II. Each Selling Shareholder, severally and not jointly, represents and
warrants to and agrees with each Underwriter and the Company that:
(a) Such Selling Shareholder now has and on the Closing Date, and on
any later date on which Option Shares are purchased, will have valid marketable
title to the Shares to be sold by such Selling Shareholder, free and clear of
any pledge, lien, security interest, encumbrance, claim or equitable interest
other than pursuant to this Agreement; and upon delivery of such Shares
hereunder and payment of the purchase price as herein contemplated, each of the
Underwriters will obtain valid marketable title to the Shares purchased by it
from such Selling Shareholder, free and clear of any pledge, lien, security
interest pertaining to such Selling Shareholder or such Selling Shareholder's
property, encumbrance, claim or equitable interest, including any liability for
estate or inheritance taxes, or any liability to or claims of any creditor,
devisee, legatee or beneficiary of such Selling Shareholder.
(b) Such Selling Shareholder has duly authorized (if applicable),
executed and delivered, in the form heretofore furnished to the Representatives,
an irrevocable Power of Attorney (the "Power of Attorney") appointing Mark T.
Walton and Michael B. Perrine as attorneys-in-fact (collectively, the
"Attorneys" and individually, an "Attorney") and a Letter of Transmittal and
Custody Agreement (the "Custody Agreement") with
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<PAGE>
______________________________, as custodian (the "Custodian"); each of the
Power of Attorney and the Custody Agreement constitutes a valid and binding
agreement on the part of such Selling Shareholder, enforceable in accordance
with its terms, except as the enforcement thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting creditors' rights generally or by general equitable
principles; and each of such Selling Shareholder's Attorneys, acting alone, is
authorized to execute and deliver this Agreement and the certificate referred to
in Section 6(i) hereof on behalf of such Selling Shareholder, to determine the
purchase price to be paid by the several Underwriters to such Selling
Shareholder as provided in Section 3 hereof, to authorize the delivery of the
Selling Shareholder Shares and the Option Shares to be sold by such Selling
Shareholder under this Agreement and to duly endorse (in blank or otherwise) the
certificate or certificates representing such Shares or a stock power or powers
with respect thereto, to accept payment therefor, and otherwise to act on behalf
of such Selling Shareholder in connection with this Agreement.
(c) All consents, approvals, authorizations and orders required for
the execution and delivery by such Selling Shareholder of the Power of Attorney
and the Custody Agreement, the execution and delivery by or on behalf of such
Selling Shareholder of this Agreement and the sale and delivery of the Selling
Shareholder Shares and the Option Shares to be sold by such Selling Shareholder
under this Agreement (other than, at the time of the execution hereof (if the
Registration Statement has not yet been declared effective by the Commission),
the issuance of the order of the Commission declaring the Registration Statement
effective and such consents, approvals, authorizations or orders as may be
necessary under state or other securities or Blue Sky laws) have been obtained
and are in full force and effect; such Selling Shareholder, if other than a
natural person, has been duly organized and is validly existing in good standing
under the laws of the jurisdiction of its organization as the type of entity
that it purports to be; and such Selling Shareholder has full legal right, power
and authority to enter into and perform its obligations under this Agreement and
such Power of Attorney and Custody Agreement, and to sell, assign, transfer and
deliver the Shares to be sold by such Selling Shareholder under this Agreement.
(d) Such Selling Shareholder will not, during the Lock-up Period,
effect the Disposition of any Securities now owned or hereafter acquired
directly by such Selling Shareholder or with respect to which such Selling
Shareholder has or hereafter acquires the power of disposition, otherwise than
(i) as a bona fide gift or gifts, provided the donee or donees thereof agree in
writing to be bound by this restriction, (ii) as a distribution to limited
partners or shareholders of such Selling Shareholder, provided that the
distributees thereof agree in writing to be bound by the terms of this
restriction, or (iii) with the prior written consent of Robertson, Stephens &
Company LLC. The foregoing restriction is expressly agreed to preclude the
holder of the Securities from engaging in any hedging or other transaction which
is designed to or reasonably expected to lead to or result in a Disposition of
Securities during the Lock-up Period, even if such Securities would be disposed
of by someone other than the Selling Shareholder. Such prohibited hedging or
other transactions would including, without limitation, any short sale (whether
or not against the box) or any purchase, sale or grant of any right (including,
without limitation, any put or call option) with respect to any Securities or
with respect to any security (other than a broad-based market basket or index)
that includes, relates to or derives any significant part of its value from
Securities. Such Selling Shareholder also agrees and consents to the entry of
stop transfer instructions with the Company's transfer agent against the
transfer of the securities held by such Selling Shareholder except in compliance
with this restriction.
(e) Certificates in negotiable form for all Shares to be sold by such
Selling Shareholder under this Agreement, together with a stock power or powers
duly endorsed in blank by such Selling Shareholder, have been placed in custody
with the Custodian for the purpose of effecting delivery hereunder.
(f) This Agreement has been duly authorized by each Selling
Shareholder that is not a natural person and has been duly executed and
delivered by or on behalf of such Selling Shareholder and is a valid and binding
agreement of such Selling Shareholder, enforceable in accordance with its terms,
except as rights to indemnification hereunder may be limited by applicable law
and except as the enforcement hereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally or by general equitable principles; and the
performance of this Agreement and the consummation of the transactions herein
contemplated will not result in a breach or violation of any of the terms and
provisions of or
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<PAGE>
constitute a default under any bond, debenture, note or other evidence of
indebtedness, or under any lease, contract, indenture, mortgage, deed of trust,
loan agreement, joint venture or other agreement or instrument to which such
Selling Shareholder is a party or by which such Selling Shareholder, or any
Selling Shareholder Shares or any Option Shares to be sold by such Selling
Shareholder hereunder, may be bound or, to the best of such Selling
Shareholder's knowledge, result in any violation of any law, order, rule,
regulation, writ, injunction, judgment or decree of any court, government or
governmental agency or body, domestic or foreign, having jurisdiction over such
Selling Shareholder or over the properties of such Selling Shareholder, or, if
such Selling Shareholder is other than a natural person, result in any violation
of any provisions of the charter, bylaws or other organizational documents of
such Selling Shareholder.
(g) Such Selling Shareholder has not taken and will not take, directly
or indirectly, any action designed to or that might reasonably be expected to
cause or result in stabilization or manipulation of the price of the Common
Stock to facilitate the sale or resale of the Shares.
(h) Such Selling Shareholder has not distributed and will not
distribute any prospectus or other offering material in connection with the
offering and sale of the Shares.
(i) All information furnished by or on behalf of such Selling
Shareholder relating to such Selling Shareholder and the Selling Shareholder
Shares that is contained in the representations and warranties of such Selling
Shareholder in such Selling Shareholder's Power of Attorney or set forth in the
Registration Statement and the Prospectus is, and at the time the Registration
Statement became or becomes, as the case may be, effective and at all times
subsequent thereto up to and on the Closing Date, and on any later date on which
Option Shares are to be purchased, was or will be, true, correct and complete,
and does not, and at the time the Registration Statement became or becomes, as
the case may be, effective and at all times subsequent thereto up to and on the
Closing Date ,and on any later date on which Option Shares are to be purchased,
will not, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make such
information not misleading.
(j) Such Selling Shareholder will review the Prospectus and will
comply with all agreements and satisfy all conditions on its part to be complied
with or satisfied pursuant to this Agreement on or prior to the Closing Date, or
any later date on which Option Shares are to be purchased, as the case may be,
and will advise one of its Attorneys and Robertson, Stephens & Company LLC prior
to the Closing Date or such later date on which Option Shares are to be
purchased, as the case may be, if any statement to be made on behalf of such
Selling Shareholder in the certificate contemplated by Section 6(i) would be
inaccurate if made as of the Closing Date or such later date on which Option
Shares are to be purchased, as the case may be.
(k) Such Selling Shareholder does not have, or has waived prior to the
date hereof, any preemptive right, co-sale right or right of first refusal or
other similar right to purchase any of the Shares that are to be sold by the
Company or any of the other Selling Shareholders to the Underwriters pursuant to
this Agreement; such Selling Shareholder does not have, or has waived prior to
the date hereof, any registration right or other similar right to participate in
the offering made by the Prospectus, other than such rights of participation as
have been satisfied by the participation of such Selling Shareholder in the
transactions to which this Agreement relates in accordance with the terms of
this Agreement; and such Selling Shareholder does not own any warrants, options
or similar rights to acquire, and does not have any right or arrangement to
acquire, any capital stock, rights, warrants, options or other securities from
the Company, other than those described in the Registration Statement and the
Prospectus.
3. Purchase, Sale and Delivery of Shares. On the basis of the
-------------------------------------
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company and the Selling Shareholders
agree, severally and not jointly, to sell to the Underwriters, and each
Underwriter agrees, severally and not jointly, to purchase from the Company and
the Selling Shareholders, respectively, at a purchase price of $_____ per share,
the respective number of Company Shares and Selling Shareholder Shares set forth
opposite the respective names
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<PAGE>
of the Company and the Selling Shareholders in Schedule B hereto. The obligation
of each Underwriter to the Company and to each Selling Shareholder shall be to
purchase from the Company or such Selling Shareholder that number of Company
Shares or Selling Shareholder Shares, as the case may be, which (as nearly as
practicable, as determined by you) is in the same proportion to the number of
Company Shares or Selling Shareholder Shares, as the case may be, set forth
opposite the name of the Company or such Selling Shareholder in Schedule B
hereto as the number of Firm Shares which is set forth opposite the name of such
Underwriter in Schedule A hereto (subject to adjustment as provided in Section
10) is to the total number of Firm Shares to be purchased by all the
Underwriters under this Agreement.
The certificates in negotiable form for the Selling Shareholder Shares
have been placed in custody (for delivery under this Agreement) under the
Custody Agreement. Each Selling Shareholder agrees that the certificates for
the Selling Shareholder Shares of such Selling Shareholder so held in custody
are subject to the interests of the Underwriters hereunder, that the
arrangements made by such Selling Shareholder for such custody, including the
Power of Attorney is to that extent irrevocable and that the obligations of such
Selling Shareholder hereunder shall not be terminated by the act of such Selling
Shareholder or by operation of law, whether by the death or incapacity of such
Selling Shareholder or the occurrence of any other event, except as specifically
provided herein or in the Custody Agreement. If any Selling Shareholder should
die or be incapacitated, or if any other such event should occur, before the
delivery of the certificates for the Selling Shareholder Shares hereunder, the
Selling Shareholder Shares to be sold by such Selling Shareholder shall, except
as specifically provided herein or in the Custody Agreement, be delivered by the
Custodian in accordance with the terms and conditions of this Agreement as if
such death, incapacity or other event had not occurred, regardless of whether
the Custodian shall have received notice of such death or other event.
Delivery of definitive certificates for the Firm Shares to be purchased
by the Underwriters pursuant to this Section 3 shall be made against payment of
the purchase price therefor by the several Underwriters by certified or official
bank check or checks drawn in same-day funds, payable to the order of the
Company with regard to the Shares being purchased from the Company, and to the
order of the Custodian for the respective accounts of the Selling Shareholders
with regard to the Shares being purchased from such Selling Shareholders, at the
offices of Jenkens & Gilchrist, 600 Congress Avenue, Suite 2200, Austin, Texas
78701 (or at such other place as may be agreed upon among the Representatives,
the Company and the Attorneys on behalf of the Selling Shareholders), at 7:00
A.M., San Francisco time (a) on the third (3rd) full business day following the
first day that Shares are traded, (b) if this Agreement is executed and
delivered after 1:30 P.M., San Francisco time, the fourth (4th) full business
day following the day that this Agreement is executed and delivered or (c) at
such other time and date not later than seven (7) full business days following
the first day that Shares are traded as the Representatives, the Company and the
Attorneys on behalf of the Selling Shareholders may determine (or at such time
and date to which payment and delivery shall have been postponed pursuant to
Section 10 hereof), such time and date of payment and delivery being herein
called the "Closing Date;" provided, however, that if the Company has not made
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available to the Representatives copies of the Prospectus within the time
provided in Section 4(d) hereof, the Representatives may, in their sole
discretion, postpone the Closing Date until no later than two (2) full business
days following delivery of copies of the Prospectus to the Representatives. The
certificates for the Firm Shares to be so delivered will be made available to
you at such office or such other location including, without limitation, in New
York City, as you may reasonably request for checking at least one (1) full
business day prior to the Closing Date and will be in such names and
denominations as you may request, such request to be made at least two (2) full
business days prior to the Closing Date. If the Representatives so elect,
delivery of the Firm Shares may be made by credit through full FAST transfer to
the accounts at The Depository Trust Company designated by the Representatives.
It is understood that you, individually, and not as the Representatives
of the several Underwriters, may (but shall not be obligated to) make payment of
the purchase price on behalf of any Underwriter or Underwriters whose check or
checks shall not have been received by you prior to the Closing Date for the
Firm Shares to be purchased by such Underwriter or Underwriters. Any such
payment by you shall not relieve any such Underwriter or Underwriters of any of
its or their obligations hereunder.
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<PAGE>
After the Registration Statement becomes effective, the several
Underwriters intend to make an initial public offering (as such term is
described in Section 11 hereof) of the Firm Shares at an initial public offering
price of $_____ per share. After the initial public offering, the several
Underwriters may, in their discretion, vary the public offering price.
The information set forth in the last paragraph on the front cover page
(insofar as such information relates to the Underwriters), under the first
paragraph on page 2, concerning stabilization and over-allotment by the
Underwriters, and under the _____ and _____ paragraphs under the caption
"Underwriting" in any Preliminary Prospectus and in the final form of Prospectus
filed pursuant to Rule 424(b) of the Rules and Regulations constitutes the only
information furnished by the Underwriters to the Company for inclusion in any
Preliminary Prospectus, the Prospectus or the Registration Statement, and you,
on behalf of the respective Underwriters, represent and warrant to the Company
and the Selling Shareholders that the statements made therein do not include any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
4. Further Agreements of the Company. The Company agrees with the several
---------------------------------
Underwriters that:
(a) The Company will use its best efforts to cause the Registration
Statement and any amendment thereof, if not effective at the time and date that
this Agreement is executed and delivered by the parties hereto, to become
effective as promptly as possible; the Company will use its best efforts to
cause any abbreviated registration statement pursuant to Rule 462(b) of the
Rules and Regulations as may be required subsequent to the date the Registration
Statement is declared effective to become effective as promptly as possible; the
Company will notify you, promptly after it shall receive notice thereof, of the
time when the Registration Statement, any subsequent amendment to the
Registration Statement or any abbreviated registration statement has become
effective or any supplement to the Prospectus has been filed; if the Company
omitted information from the Registration Statement at the time it was
originally declared effective in reliance upon Rule 430A(a) of the Rules and
Regulations, the Company will provide evidence satisfactory to you that the
Prospectus contains such information and has been filed, within the time period
prescribed, with the Commission pursuant to subparagraph (1) or (4) of Rule
424(b) of the Rules and Regulations or as part of a post-effective amendment to
such Registration Statement as originally declared effective which is declared
effective by the Commission; if the Company files a term sheet pursuant to Rule
434 of the Rules and Regulations, the Company will provide evidence satisfactory
to you that the Prospectus and term sheet meeting the requirements of Rule
434(b) or (c), as applicable, of the Rules and Regulations, have been filed,
within the time period prescribed, with the Commission pursuant to subparagraph
(7) of Rule 424(b) of the Rules and Regulations; if for any reason the filing of
the final form of Prospectus is required under Rule 424(b)(3) of the Rules and
Regulations, it will provide evidence satisfactory to you that the Prospectus
contains such information and has been filed with the Commission within the time
period prescribed; it will notify you promptly of any request by the Commission
for the amending or supplementing of the Registration Statement or the
Prospectus or for additional information; promptly upon your request, it will
prepare and file with the Commission any amendments or supplements to the
Registration Statement or Prospectus which, in the opinion of counsel for the
several Underwriters ("Underwriters' Counsel"), may be necessary or advisable in
connection with the distribution of the Shares by the Underwriters; it will
promptly prepare and file with the Commission, and promptly notify you of the
filing of, any amendments or supplements to the Registration Statement or
Prospectus which may be necessary to correct any statements or omissions, if, at
any time when a prospectus relating to the Shares is required to be delivered
under the Act, any event shall have occurred as a result of which the Prospectus
or any other prospectus relating to the Shares as then in effect would include
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; in case any Underwriter is required
to deliver a prospectus nine (9) months or more after the effective date of the
Registration Statement in connection with the sale of the Shares, it will
prepare promptly upon request, but at the expense of such Underwriter, such
amendment or amendments to the Registration Statement and such prospectus or
prospectuses as may be necessary to permit compliance with the requirements of
Section 10(a)(3) of the Act; and it will file no amendment or supplement to the
Registration Statement or Prospectus, which shall not previously have been
submitted to you a reasonable time prior to the proposed filing thereof or to
which you shall reasonably object
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<PAGE>
in writing, subject, however, to compliance with the Act and the Rules and
Regulations and the provisions of this Agreement.
(b) The Company will advise you, promptly after it shall receive
notice or obtain knowledge, of the issuance of any stop order by the Commission
suspending the effectiveness of the Registration Statement or of the initiation
or threat of any proceeding for that purpose; and it will promptly use its best
efforts to prevent the issuance of any stop order or to obtain its withdrawal at
the earliest possible moment if such stop order should be issued.
(c) The Company will use its best efforts to qualify the Shares for
offering and sale under the securities laws of such jurisdictions as you may
designate and to continue such qualifications in effect for so long as may be
required for purposes of the distribution of the Shares, except that the Company
shall not be required in connection therewith or as a condition thereof to
qualify as a foreign corporation or to execute a general consent to service of
process in any jurisdiction in which it is not otherwise required to be so
qualified or to so execute a general consent to service of process. In each
jurisdiction in which the Shares shall have been qualified as above provided,
the Company will make and file such statements and reports in each year as are
or may be required by the laws of such jurisdiction.
(d) The Company will furnish to you, as soon as available, and, in the
case of the Prospectus and any term sheet or abbreviated term sheet under Rule
434, in no event later than the first (1st) full business day following the
first day that Shares are traded, copies of the Registration Statement (three of
which will be signed and which will include all exhibits), each Preliminary
Prospectus, the Prospectus and any amendments or supplements to such documents,
including any prospectus prepared to permit compliance with Section 10(a)(3) of
the Act, all in such quantities as you may from time to time reasonably request.
Notwithstanding the foregoing, if Robertson, Stephens & Company LLC, on behalf
of the several Underwriters, shall agree to the utilization of Rule 434 of the
Rules and Regulations, the Company shall provide to you copies of a Preliminary
Prospectus updated in all respects through the date specified by you in such
quantities as you may from time to time reasonably request.
(e) The Company will make generally available to its securityholders
as soon as practicable, but in any event not later than the forty-fifth (45th)
day following the end of the fiscal quarter first occurring after the first
anniversary of the effective date of the Registration Statement, an earnings
statement (which will be in reasonable detail but need not be audited) complying
with the provisions of Section 11(a) of the Act and covering a twelve (12) month
period beginning after the effective date of the Registration Statement.
(f) During a period of five (5) years after the date hereof, the
Company will furnish to its shareholders as soon as practicable after the end of
each respective period, annual reports (including financial statements audited
by independent certified public accountants) and unaudited quarterly reports of
operations for each of the first three quarters of the fiscal year, and will
furnish to you and the other several Underwriters hereunder, upon request (i)
concurrently with furnishing such reports to its shareholders, statements of
operations of the Company for each of the first three (3) quarters in the form
furnished to the Company's shareholders, (ii) concurrently with furnishing to
its shareholders, a balance sheet of the Company as of the end of such fiscal
year, together with statements of operations, of shareholders' equity, and of
cash flows of the Company for such fiscal year, accompanied by a copy of the
certificate or report thereon of independent certified public accountants, (iii)
as soon as they are available, copies of all reports (financial or other) mailed
to shareholders, (iv) as soon as they are available, copies of all reports and
financial statements furnished to or filed with the Commission, any securities
exchange or the National Association of Securities Dealers, Inc. ("NASD"), (v)
every material press release and every material news item or article in respect
of the Company or its affairs which was generally released to shareholders or
prepared by the Company or any of its subsidiaries, and (vi) any additional
information of a public nature concerning the Company or its subsidiaries, or
its business which you may reasonably request. During such five (5) year
period, if the Company shall have active subsidiaries, the foregoing financial
statements shall be on a consolidated basis to the extent that the accounts of
the Company and its subsidiaries are consolidated, and shall be accompanied by
similar financial statements for any significant subsidiary which is not so
consolidated.
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(g) The Company will apply the net proceeds from the sale of the
Shares being sold by it in the manner set forth under the caption "Use of
Proceeds" in the Prospectus.
(h) The Company will maintain a transfer agent and, if necessary under
the jurisdiction of incorporation of the Company, a registrar (which may be the
same entity as the transfer agent) for its Common Stock.
(i) The Company will file Form SR in conformity with the requirements
of the Act and the Rules and Regulations.
(j) If the transactions contemplated hereby are not consummated by
reason of any failure, refusal or inability on the part of the Company or any
Selling Shareholder to perform any agreement on their respective parts to be
performed hereunder or to fulfill any condition of the Underwriters' obligations
hereunder, or if the Company shall terminate this Agreement pursuant to Section
11(a) hereof, or if the Underwriters shall terminate this Agreement pursuant to
Section 11(b)(i), the Company will reimburse the several Underwriters for all
out-of-pocket expenses (including fees and disbursements of Underwriters'
Counsel) incurred by the Underwriters in investigating or preparing to market or
marketing the Shares.
(k) If at any time during the ninety (90) day period after the
Registration Statement becomes effective, any rumor, publication or event
relating to or affecting the Company shall occur as a result of which in your
opinion the market price of the Common Stock has been or is likely to be
materially affected (regardless of whether such rumor, publication or event
necessitates a supplement to or amendment of the Prospectus), the Company will,
after written notice from you advising the Company to the effect set forth
above, forthwith prepare, consult with you concerning the substance of and
disseminate a press release or other public statement, reasonably satisfactory
to you, responding to or commenting on such rumor, publication or event.
(l) During the Lock-up Period, the Company will not, without the prior
written consent of Robertson Stephens & Company LLC, effect the Disposition of,
directly or indirectly, any Securities other than the sale of the Company Shares
and the Option Shares to be sold by the Company hereunder and the Company's
issuance of options or Common Stock under the Company's presently authorized
Incentive Stock Plan (the "Option Plan").
(m) During a period of ninety (90) days from the effective date of the
Registration Statement, the Company will not file a registration statement
registering shares under the Option Plan or other employee benefit plan.
5. Expenses.
--------
(a) The Company and the Selling Shareholders agree with each
Underwriter that:
(i) The Company and the Selling Shareholders, jointly and
severally, will pay and bear all costs and expenses in connection with the
preparation, printing and filing of the Registration Statement (including
financial statements, schedules and exhibits), Preliminary Prospectuses and the
Prospectus and any amendments or supplements thereto; the printing of this
Agreement, the Agreement Among Underwriters, the Selected Dealer Agreement, the
Preliminary Blue Sky Survey and any Supplemental Blue Sky Survey, the
Underwriters' Questionnaire and Power of Attorney, and any instruments related
to any of the foregoing; the issuance and delivery of the Shares hereunder to
the several Underwriters, including transfer taxes, if any, the cost of all
certificates representing the Shares and transfer agents' and registrars' fees;
the fees and disbursements of counsel for the Company; all fees and other
charges of the Company's independent certified public accountants; the cost of
furnishing to the several Underwriters copies of the Registration Statement
(including appropriate exhibits), the Preliminary Prospectus and the Prospectus,
and any amendments or supplements to any of the foregoing; NASD filing fees and
the cost of qualifying the Shares under the laws of such jurisdictions as you
may designate (including filing fees and fees and disbursements of Underwriters'
Counsel in connection with such NASD filings and Blue Sky qualifications); and
all other expenses directly incurred by the Company and the Selling Shareholders
in connection
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with the performance of their obligations hereunder. Any additional expenses
incurred as a result of the sale of the Shares by the Selling Shareholders will
be borne collectively by the Company and the Selling Shareholders. The
provisions of this Section 5(a)(i) are intended to relieve the Underwriters from
the payment of the expenses and costs which the Selling Shareholders and the
Company hereby agree to pay, but shall not affect any agreement which the
Selling Shareholders and the Company may make, or may have made, for the sharing
of any of such expenses and costs. Such agreements shall not impair the
obligations of the Company and the Selling Shareholders hereunder to the several
Underwriters.
(ii) In addition to its other obligations under Section 8(a)
hereof, the Company agrees that, as an interim measure during the pendency of
any claim, action, investigation, inquiry or other proceeding described in
Section 8(a) hereof, it will reimburse the Underwriters on a monthly basis for
all reasonable legal or other expenses incurred in connection with investigating
or defending any such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of the Company's obligation to reimburse the Underwriters for
such expenses and the possibility that such payments might later be held to have
been improper by a court of competent jurisdiction. To the extent that any such
interim reimbursement payment is so held to have been improper, the Underwriters
shall promptly return such payment to the Company together with interest,
compounded daily, determined on the basis of the prime rate (or other commercial
lending rate for borrowers of the highest credit standing) listed from time to
time in The Wall Street Journal which represents the base rate on corporate
loans posted by a substantial majority of the nation's thirty (30) largest banks
(the "Prime Rate"). Any such interim reimbursement payments which are not made
to the Underwriters within thirty (30) days of a request for reimbursement shall
bear interest at the Prime Rate from the date of such request.
(iii) In addition to their other obligations under Section 8(b)
hereof, each Selling Shareholder agrees that, as an interim measure during the
pendency of any claim, action, investigation, inquiry or other proceeding
described in Section 8(b) hereof relating to such Selling Shareholder, it will
reimburse the Underwriters on a monthly basis for all reasonable legal or other
expenses incurred in connection with investigating or defending any such claim,
action, investigation, inquiry or other proceeding, notwithstanding the absence
of a judicial determination as to the propriety and enforceability of such
Selling Shareholder's obligation to reimburse the Underwriters for such expenses
and the possibility that such payments might later be held to have been improper
by a court of competent jurisdiction. To the extent that any such interim
reimbursement payment is so held to have been improper, the Underwriters shall
promptly return such payment to the Selling Shareholders, together with
interest, compounded daily, determined on the basis of the Prime Rate. Any such
interim reimbursement payments which are not made to the Underwriters within
thirty (30) days of a request for reimbursement shall bear interest at the Prime
Rate from the date of such request.
(b) In addition to their other obligations under Section 8(c) hereof,
the Underwriters severally and not jointly agree that, as an interim measure
during the pendency of any claim, action, investigation, inquiry or other
proceeding described in Section 8(c) hereof, they will reimburse the Company and
each Selling Shareholder on a monthly basis for all reasonable legal or other
expenses incurred in connection with investigating or defending any such claim,
action, investigation, inquiry or other proceeding, notwithstanding the absence
of a judicial determination as to the propriety and enforceability of the
Underwriters' obligation to reimburse the Company and each such Selling
Shareholder for such expenses and the possibility that such payments might later
be held to have been improper by a court of competent jurisdiction. To the
extent that any such interim reimbursement payment is so held to have been
improper, the Company and each such Selling Shareholder shall promptly return
such payment to the Underwriters together with interest, compounded daily,
determined on the basis of the Prime Rate. Any such interim reimbursement
payments which are not made to the Company and each such Selling Shareholder
within thirty (30) days of a request for reimbursement shall bear interest at
the Prime Rate from the date of such request.
(c) It is agreed that any controversy arising out of the operation of
the interim reimbursement arrangements set forth in Sections 5(a)(ii), 5(a)(iii)
and 5(b) hereof, including the amounts of any requested reimbursement payments,
the method of determining such amounts and the basis on which such amounts shall
be
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<PAGE>
apportioned among the reimbursing parties, shall be settled by arbitration
conducted under the provisions of the Constitution and Rules of the Board of
Governors of the New York Stock Exchange, Inc. or pursuant to the Code of
Arbitration Procedure of the NASD. Any such arbitration must be commenced by
service of a written demand for arbitration or a written notice of intention to
arbitrate, therein electing the arbitration tribunal. In the event the party
demanding arbitration does not make such designation of an arbitration tribunal
in such demand or notice, then the party responding to said demand or notice is
authorized to do so. Any such arbitration will be limited to the operation of
the interim reimbursement provisions contained in Sections 5(a)(ii), 5(a)(iii)
and 5(b) hereof and will not resolve the ultimate propriety or enforceability of
the obligation to indemnify for expenses which is created by the provisions of
Sections 8(a), 8(b) and 8(c) hereof or the obligation to contribute to expenses
which is created by the provisions of Section 8(e) hereof.
6. Conditions of Underwriters' Obligations. The obligations of the several
---------------------------------------
Underwriters to purchase and pay for the Shares as provided herein shall be
subject to the accuracy, as of the date hereof and the Closing Date and any
later date on which Option Shares are to be purchased, as the case may be, of
the representations and warranties of the Company and the Selling Shareholders
herein, to the performance by the Company and the Selling Shareholders of their
respective obligations hereunder and to the following additional conditions:
(a) The Registration Statement shall have become effective not later
than 2:00 P.M., San Francisco time, on the date following the date of this
Agreement, or such later date as shall be consented to in writing by you; and no
stop order suspending the effectiveness thereof shall have been issued and no
proceedings for that purpose shall have been initiated or, to the knowledge of
the Company, any Selling Shareholder or any Underwriter, threatened by the
Commission, and any request of the Commission for additional information (to be
included in the Registration Statement or the Prospectus or otherwise) shall
have been complied with to the satisfaction of Underwriters' Counsel.
(b) All corporate proceedings and other legal matters in connection
with this Agreement, the form of Registration Statement and the Prospectus, and
the registration, authorization, issue, sale and delivery of the Shares, shall
have been reasonably satisfactory to Underwriters' Counsel, and such counsel
shall have been furnished with such papers and information as they may
reasonably have requested to enable them to pass upon the matters referred to in
this Section.
(c) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date there shall not have been any change in the condition
(financial or otherwise), earnings, operations, business or business prospects
of the Company and its subsidiaries considered as one enterprise from that set
forth in the Registration Statement or Prospectus, which, in your sole judgment,
is material and adverse and that makes it, in your sole judgment, impracticable
or inadvisable to proceed with the public offering of the Shares as contemplated
by the Prospectus.
(d) You shall have received on the Closing Date and on any later date
on which Option Shares are purchased, as the case may be, the following opinion
of counsel for the Company and the Selling Shareholders, dated the Closing Date
or such later date on which Option Shares are purchased addressed to the
Underwriters and with reproduced copies or signed counterparts thereof for each
of the Underwriters, to the effect that:
(i) The Company and each of its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation;
(ii) The Company and each of its subsidiaries has the corporate
power and authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus;
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(iii) The Company and each of its subsidiaries is duly qualified
to do business as a foreign corporation and is in good standing in each
jurisdiction, if any, in which the ownership or leasing of its
properties or the conduct of its business requires such qualification,
except where the failure to be so qualified or be in good standing would
not have a material adverse effect on the condition (financial or
otherwise), earnings, operations or business of the Company and its
subsidiaries considered as one enterprise. To such counsel's knowledge,
the Company does not own or control, directly or indirectly, any
corporation, association or other entity other than [list subsidiaries];
(iv) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectus under the caption
"Capitalization" as of the dates stated therein, the issued and
outstanding shares of capital stock of the Company (including the
Selling Shareholder Shares) have been duly and validly issued and are
fully paid and nonassessable, and, to such counsel's knowledge, will not
have been issued in violation of or subject to any preemptive right, co-
sale right, registration right, right of first refusal or other similar
right;
(v) All issued and outstanding shares of capital stock of each
subsidiary of the Company have been duly authorized and validly issued
and are fully paid and nonassessable, and, to such counsel's knowledge,
have not been issued in violation of or subject to any preemptive right,
co-sale right, registration right, right of first refusal or other
similar right and are owned by the Company free and clear of any pledge,
lien, security interest, encumbrance, claim or equitable interest;
(vi) The Firm Shares or the Option Shares, as the case may be,
to be issued by the Company pursuant to the terms of this Agreement have
been duly authorized and, upon issuance and delivery against payment
therefor in accordance with the terms hereof, will be duly and validly
issued and fully paid and nonassessable, and will not have been issued
in violation of or subject to any preemptive right, co-sale right,
registration right, right of first refusal or other similar right of
shareholders;
(vii) The Company has the corporate power and authority to enter
into this Agreement and to issue, sell and deliver to the Underwriters
the Shares to be issued and sold by it hereunder;
(viii) This Agreement has been duly authorized by all necessary
corporate action on the part of the Company and has been duly executed
and delivered by the Company and, assuming due authorization, execution
and delivery by you, is a valid and binding agreement of the Company,
enforceable in accordance with its terms, except insofar as
indemnification provisions may be limited by applicable law and except
as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting
creditors' rights generally or by general equitable principles;
(ix) The Registration Statement has become effective under the
Act and, to such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are pending or
threatened under the Act;
(x) The Registration Statement and the Prospectus, and each
amendment or supplement thereto (other than the financial statements
(including supporting schedules) and financial data derived therefrom as
to which such counsel need express no opinion), as of the effective date
of the Registration Statement, complied as to form in all material
respects with the requirements of the Act and the applicable Rules and
Regulations;
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<PAGE>
(xi) The information in the Prospectus under the caption
"Description of Capital Stock," to the extent that it constitutes
matters of law or legal conclusions, has been reviewed by such counsel
and is a fair summary of such matters and conclusions; and the forms of
certificates evidencing the Common Stock and filed as exhibits to the
Registration Statement comply with Texas law;
(xii) The description in the Registration Statement and the
Prospectus of the charter and bylaws of the Company and of statutes are
accurate and fairly present the information required to be presented by
the Act and the applicable Rules and Regulations;
(xiii) To such counsel's knowledge, there are no agreements,
contracts, leases or documents to which the Company is a party of a
character required to be described or referred to in the Registration
Statement or Prospectus or to be filed as an exhibit to the Registration
Statement which are not described or referred to therein or filed as
required;
(xiv) The performance of this Agreement and the consummation
of the transactions herein contemplated (other than performance of the
Company's indemnification obligations hereunder, concerning which no
opinion need be expressed) will not (a) result in any violation of the
Company's charter or bylaws or (b) to such counsel's knowledge, result
in a material breach or violation of any of the terms and provisions of,
or constitute a default under, any bond, debenture, note or other
evidence of indebtedness, or under any lease, contract, indenture,
mortgage, deed of trust, loan agreement, joint venture or other
agreement or instrument known to such counsel to which the Company is a
party or by which its properties are bound, or any applicable statute,
rule or regulation known to such counsel or, to such counsel's
knowledge, any order, writ or decree of any court, government or
governmental agency or body having jurisdiction over the Company or any
of its subsidiaries, or over any of their properties or operations;
(xv) No consent, approval, authorization or order of or
qualification with any court, government or governmental agency or body
having jurisdiction over the Company or any of its subsidiaries, or over
any of their properties or operations is necessary in connection with
the consummation by the Company of the transactions herein contemplated,
except such as have been obtained under the Act or such as may be
required under state or other securities or Blue Sky laws in connection
with the purchase and the distribution of the Shares by the
Underwriters;
(xvi) To such counsel's knowledge, there are no legal or
governmental proceedings pending or threatened against the Company or
any of its subsidiaries of a character required to be disclosed in the
Registration Statement or the Prospectus by the Act or the Rules and
Regulations, other than those described therein;
(xvii) To such counsel's knowledge, neither the Company nor
any of its subsidiaries is presently (a) in material violation of its
respective charter or bylaws, or (b) in material breach of any
applicable statute, rule or regulation known to such counsel or, to such
counsel's knowledge, any order, writ or decree of any court or
governmental agency or body having jurisdiction over the Company or any
of its subsidiaries, or over any of their properties or operations;
(xviii) To such counsel's knowledge, except as set forth in the
Registration Statement and Prospectus, no holders of Common Stock or
other securities of the Company have registration rights with respect to
securities of the Company and, except as set forth in the Registration
Statement and Prospectus, all holders of securities of the Company
having rights known to such counsel to registration of such shares of
Common Stock or other securities, because of the filing of the
Registration Statement by the Company have, with respect to the
offering contemplated thereby, waived such rights or such rights have
expired by reason of lapse of time following notification of the
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Company's intent to file the Registration Statement or have included
securities in the Registration Statement pursuant to the exercise of and
in full satisfaction of such rights;
(xix) Each Selling Shareholder which is not a natural person has
full right, power and authority to enter into and to perform its
obligations under the Power of Attorney and Custody Agreement to be
executed and delivered by it in connection with the transactions
contemplated herein; the Power of Attorney and Custody Agreement of each
Selling Shareholder that is not a natural person has been duly
authorized by such Selling Shareholder; the Power of Attorney and
Custody Agreement of each Selling Shareholder has been duly executed and
delivered by or on behalf of such Selling Shareholder; and the Power of
Attorney and Custody Agreement of each Selling Shareholder constitutes
the valid and binding agreement of such Selling Shareholder, enforceable
in accordance with its terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting creditors' rights generally or by
general equitable principles;
(xx) Each of the Selling Shareholders has full right, power and
authority to enter into and to perform its obligations under this
Agreement and to sell, transfer, assign and deliver the Shares to be
sold by such Selling Shareholder hereunder;
(xxi) This Agreement has been duly authorized by each Selling
Shareholder that is not a natural person and has been duly executed and
delivered by or on behalf of each Selling Shareholder; and
(xxii) Upon the delivery of and payment for the Selling
Shareholder Shares as contemplated in this Agreement, each of the
Underwriters will receive valid marketable title to the Shares purchased
by it from such Selling Shareholder, free and clear of any pledge, lien,
security interest, encumbrance, claim or equitable interest. In
rendering such opinion, such counsel may assume that the Underwriters
are without notice of any defect in the title of the Shares being
purchased from the Selling Shareholders.
In addition, such counsel shall state that such counsel has
participated in conferences with officials and other representatives of the
Company, the Representatives, Underwriters' Counsel and the independent
certified public accountants of the Company, at which such conferences the
contents of the Registration Statement and Prospectus and related matters were
discussed, and although they have not verified the accuracy or completeness of
the statements contained in the Registration Statement or the Prospectus,
nothing has come to the attention of such counsel which leads them to believe
that, at the time the Registration Statement became effective and at all times
subsequent thereto up to and on the Closing Date and on any later date on which
Option Shares are to be purchased, the Registration Statement and any amendment
or supplement thereto (other than the financial statements including supporting
schedules and other financial and statistical information derived therefrom, as
to which such counsel need express no comment) contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, or at the
Closing Date or any later date on which the Option Shares are to be purchased,
as the case may be, the Registration Statement, the Prospectus and any amendment
or supplement thereto (except as aforesaid) contained any untrue statement of a
material fact or omitted to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
Counsel rendering the foregoing opinion may rely as to questions of
law not involving the laws of the United States or the State of Texas upon
opinions of local counsel, and as to questions of fact upon representations or
certificates of officers of the Company, the Selling Shareholders or officers of
the Selling Shareholders (when the Selling Shareholder is not a natural person),
and of government officials, in which case their opinion is to state that they
are so relying and that they have no knowledge of any material misstatement or
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inaccuracy in any such opinion, representation or certificate. Copies of any
opinion, representation or certificate so relied upon shall be delivered to you,
as Representatives of the Underwriters, and to Underwriters' Counsel.
(e) You shall have received on the Closing Date and on any later date
on which Option Shares are to be purchased, as the case may be, an opinion of
Brobeck, Phleger & Harrison LLP, in form and substance satisfactory to you, with
respect to the sufficiency of all such corporate proceedings and other legal
matters relating to this Agreement and the transactions contemplated hereby as
you may reasonably require, and the Company shall have furnished to such counsel
such documents as they may have requested for the purpose of enabling them to
pass upon such matters.
(f) You shall have received on the Closing Date and on any later date
on which Option Shares are to be purchased, as the case may be, a letter from
Ernst & Young LLP addressed to the Company and the Underwriters, dated the
Closing Date or such later date on which Option Shares are to be purchased, as
the case may be, confirming that they are independent certified public
accountants with respect to the Company within the meaning of the Act and the
applicable published Rules and Regulations and based upon the procedures
described in such letter delivered to you concurrently with the execution of
this Agreement (herein called the "E&Y Original Letter"), but carried out to a
date not more than five (5) business days prior to the Closing Date or such
later date on which Option Shares are to be purchased, as the case may be, (i)
confirming, to the extent true, that the statements and conclusions set forth in
the Original Letter are accurate as of the Closing Date or such later date on
which Option Shares are to be purchased, as the case may be, and (ii) setting
forth any revisions and additions to the statements and conclusions set forth in
the E&Y Original Letter which are necessary to reflect any changes in the facts
described in the E&Y Original Letter since the date of such letter, or to
reflect the availability of more recent financial statements, data or
information. The letter shall not disclose any change in the condition
(financial or otherwise), earnings, operations, business or business prospects
of the Company and its subsidiaries considered as one enterprise from that set
forth in the Registration Statement or Prospectus, which, in your sole judgment,
is material and adverse and that makes it, in your sole judgment, impracticable
or inadvisable to proceed with the public offering of the Shares as contemplated
by the Prospectus. The E&Y Original Letter shall be addressed to or for the use
of the Underwriters in form and substance satisfactory to the Underwriters and
shall (i) represent, to the extent true, that they are independent certified
public accountants with respect to the Company within the meaning of the Act and
the applicable published Rules and Regulations, (ii) set forth their opinion
with respect to their examination of the consolidated balance sheet of the
Company as of September 30, 1995 and December 31, 1994 and related consolidated
statements of operations, shareholders' equity, and cash flows for the nine (9)
month fiscal year ended September 30, 1995 and the twelve month fiscal year
ended December 31, 1994, (iii) state that Ernst & Young LLP has performed the
procedures set out in Statement on Auditing Standards No. 71 ("SAS 71") for a
review of interim financial information and providing the report of Ernst &
Young LLP as described in SAS 71 on the financial statements for each of the
nine quarters ended March 31, 1996 presented in the section of the Prospectus
captioned "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Quarterly Data and Seasonality" (the "Auarterly Financial
Statements"), (iv) state that in the course of such review, nothing came to
their attention that leads them to believe that any material modifications need
to be made to the Quarterly Financial Statements in order for them to be in
compliance with generally accepted accounting principles consistenly applied
across the periods presented and (v) address other matters agreed upon by Ernst
& Young LLP and you. In addition, you shall have received from Ernst & Young
LLP a letter addressed to the Company and made available to you for the use of
the Underwriters stating that their review of the Company's system of internal
accounting controls, to the extent they deemed necessary in establishing the
scope of their examination of the Company's consolidated financial statements as
of September 30, 1995, did not disclose any weaknesses in internal controls that
they considered to be material weaknesses.
(g) You shall have received on the Closing Date and on any later date
on which Option Shares are to be purchased, as the case may be, a letter from
Devona Jeffery, L.L.C. addressed to the Company and the Underwriters, dated the
Closing Date or such later date on which Option Shares are to be purchased, as
the case may be, confirming that they are independent certified public
accountants with respect to the Company within the meaning of the Act and the
applicable published Rules and Regulations and based upon the procedures
described in
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such letter delivered to you concurrently with the execution of this Agreement
(herein called the "Devona Original Letter"), but carried out to a date not more
than five (5) business days prior to the Closing Date or such later date on
which Option Shares are to be purchased, as the case may be, (i) confirming, to
the extent true, that the statements and conclusions set forth in the Devona
Original Letter are accurate as of the Closing Date or such later date on which
Option Shares are to be purchased, as the case may be, and (ii) setting forth
any revisions and additions to the statements and conclusions set forth in the
Devona Original Letter which are necessary to reflect any changes in the facts
described in the Devona Original Letter since the date of such letter, or to
reflect the availability of more recent financial statements, data or
information. The letter shall not disclose any change in the condition
(financial or otherwise), earnings, operations, business or business prospects
of the Company and its subsidiaries considered as one enterprise from that set
forth in the Registration Statement or Prospectus, which, in your sole judgment,
is material and adverse and that makes it, in your sole judgment, impracticable
or inadvisable to proceed with the public offering of the Shares as contemplated
by the Prospectus. The Devona Original Letter from Devona Jeffery, L.L.C. shall
be addressed to or for the use of the Underwriters in form and substance
satisfactory to the Underwriters and shall (i) represent, to the extent true,
that they are independent certified public accountants with respect to the
Company within the meaning of the Act and the applicable published Rules and
Regulations, (ii) set forth their opinion with respect to their examination of
the consolidated balance sheet of the Company as of December 31, 1993 and
related consolidated statements of operations, shareholders' equity, and cash
flows for the twelve (12) months ended December 31, 1993, and (iii) address
other matters agreed upon by Devona Jeffery, L.L.C. and you.
(h) You shall have received on the Closing Date and on any later date
on which Option Shares are to be purchased, as the case may be, a certificate of
the Company, dated the Closing Date or such later date on which Option Shares
are to be purchased, as the case may be, signed by the Chief Executive Officer
and Chief Financial Officer of the Company, to the effect that, and you shall be
satisfied that:
(i) The representations and warranties of the Company in this
Agreement are true and correct, as if made on and as of the Closing Date
or any later date on which Option Shares are to be purchased, as the
case may be, and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied at
or prior to the Closing Date or any later date on which Option Shares
are to be purchased, as the case may be;
(ii) No stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or are pending or threatened under the Act;
(iii) When the Registration Statement became effective and at
all times subsequent thereto up to the delivery of such certificate, the
Registration Statement and the Prospectus, and any amendments or
supplements thereto, contained all material information required to be
included therein by the Act and the Rules and Regulations, and in all
material respects conformed to the requirements of the Act and the Rules
and Regulations, the Registration Statement, and any amendment or
supplement thereto, did not and does not include any untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, the
Prospectus, and any amendment or supplement thereto, did not and does
not include any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, and, since
the effective date of the Registration Statement, there has occurred no
event required to be set forth in an amended or supplemented Prospectus
which has not been so set forth; and
(iv) Subsequent to the respective dates as of which information
is given in the Registration Statement and Prospectus, there has not
been (a) any material adverse change in the condition (financial or
otherwise), earnings, operations, business or business prospects of the
Company and its subsidiaries considered as one enterprise, (b) any
transaction that is material to the Company and its subsidiaries
considered as one enterprise, except transactions entered into in the
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ordinary course of business, (c) any obligation, direct or contingent,
that is material to the Company and its subsidiaries considered as one
enterprise, incurred by the Company or its subsidiaries, except
obligations incurred in the ordinary course of business, (d) any change
in the capital stock or outstanding indebtedness of the Company or any
of its subsidiaries that is material to the Company and its subsidiaries
considered as one enterprise, (e) any dividend or distribution of any
kind declared, paid or made on the capital stock of the Company or any
of its subsidiaries, or (f) any loss or damage (whether or not insured)
to the property of the Company or any of its subsidiaries which has been
sustained or will have been sustained which has a material adverse
effect on the condition (financial or otherwise), earnings, operations,
business or business prospects of the Company and its subsidiaries
considered as one enterprise.
(i) You shall be satisfied that, and you shall have received a
certificate, dated the Closing Date, or any later date on which Option Shares
are to be purchased, as the case may be, from the Attorneys for each Selling
Shareholder to the effect that, as of the Closing Date, or any later date on
which Option Shares are to be purchased, as the case may be, they have not been
informed that:
(i) The representations and warranties made by such Selling
Shareholder herein are not true or correct in any material respect on
the Closing Date or on any later date on which Option Shares are to be
purchased, as the case may be; or
(ii) Such Selling Shareholder has not complied with any
obligation or satisfied any condition which is required to be performed
or satisfied on the part of such Selling Shareholder at or prior to the
Closing Date or any later date on which Option Shares are to be
purchased, as the case may be.
(j) The Company shall have obtained and delivered to you an agreement
from each officer and director of the Company, each Selling Shareholder and each
beneficial owner of shares of Common Stock in writing prior to the date hereof
that such person will not, during the Lock-up Period, effect the Disposition of
any Securities now owned or hereafter acquired directly by such person or with
respect to which such person has or hereafter acquires the power of disposition,
otherwise than (i) as a bona fide gift or gifts, provided the donee or donees
thereof agree in writing to be bound by this restriction, (ii) as a distribution
to limited partners or shareholders of such person, provided that the
distributees thereof agree in writing to be bound by the terms of this
restriction, or (iii) with the prior written consent of Robertson, Stephens &
Company LLC. The foregoing restriction is expressly agreed to preclude the
holder of the Securities from engaging in any hedging or other transaction which
is designed to or reasonably expected to lead to or result in a Disposition of
Securities during the Lock-up Period, even if such Securities would be disposed
of by someone other than the such holder. Such prohibited hedging or other
transactions would including, without limitation, any short sale (whether or not
against the box) or any purchase, sale or grant of any right (including, without
limitation, any put or call option) with respect to any Securities or with
respect to any security (other than a broad-based market basket or index) that
includes, relates to or derives any significant part of its value from
Securities. Furthermore, such person will have also agreed and consented to the
entry of stop transfer instructions with the Company's transfer agent against
the transfer of the Securities held by such person except in compliance with
this restriction.
(k) The Company and the Selling Shareholders shall have furnished to
you such further certificates and documents as you shall reasonably request
(including certificates of officers of the Company, the Selling Shareholders or
officers of the Selling Shareholders (when the Selling Shareholder is not a
natural person) as to the accuracy of the representations and warranties of the
Company and the Selling Shareholders herein, as to the performance by the
Company and the Selling Shareholders of their respective obligations hereunder
and as to the other conditions concurrent and precedent to the obligations of
the Underwriters hereunder.
All such opinions, certificates, letters and documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
to Underwriters' Counsel. The Company and the Selling Shareholders
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will furnish you with such number of conformed copies of such opinions,
certificates, letters and documents as you shall reasonably request.
7. Option Shares.
-------------
(a) On the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth, the
Company and the Selling Shareholders, hereby grant to the several Underwriters,
for the purpose of covering over-allotments in connection with the distribution
and sale of the Firm Shares only, a nontransferable option to purchase up to an
aggregate of ________ Option Shares at the purchase price per share for the Firm
Shares set forth in Section 3 hereof.
Such option may be exercised by the Representatives on behalf of the several
Underwriters on one (1) or more occasions in whole or in part during the period
of thirty (30) days after the date on which the Firm Shares are initially
offered to the public, by giving written notice to the Company and the
Attorneys. The number of Option Shares to be purchased by each Underwriter upon
the exercise of such option shall be the same proportion of the total number of
Option Shares to be purchased by the several Underwriters pursuant to the
exercise of such option as the number of Firm Shares purchased by such
Underwriter (set forth in Schedule A hereto) bears to the total number of Firm
Shares purchased by the several Underwriters (set forth in Schedule A hereto),
adjusted by the Representatives in such manner as to avoid fractional shares.
Delivery of definitive certificates for the Option Shares to be
purchased by the several Underwriters pursuant to the exercise of the option
granted by this Section 7 shall be made against payment of the purchase price
therefor by the several Underwriters by certified or official bank check or
checks drawn in same-day funds, payable to the order of the Company with regard
to the Option Shares being purchased from the Company, and to the order of the
Custodian for the respective accounts of the Selling Shareholders with regard to
the Option Shares being purchased from such Selling Shareholders. Such delivery
and payment shall take place at the offices of Jenkens & Gilchrist, 600 Congress
Avenue, Suite 2200, Austin, Texas 78701 (or at such other place as may be
agreed upon among the Representatives, the Company and the Attorneys on behalf
of the Selling Shareholders), at 7:00 A.M., San Francisco time (i) on the
Closing Date, if written notice of the exercise of such option is received by
the Company at least two (2) full business days prior to the Closing Date, or
(ii) on a date which shall not be later than the third (3rd) full business day
following the date the Company receives written notice of the exercise of such
option, if such notice is received by the Company less than two (2) full
business days prior to the Closing Date.
The certificates for the Option Shares to be so delivered will be made
available to you at such office or such other location including, without
limitation, in New York City, as you may reasonably request for checking at
least one (1) full business day prior to the date of payment and delivery and
will be in such names and denominations as you may request, such request to be
made at least two (2) full business days prior to such date of payment and
delivery. If the Representatives so elect, delivery of the Option Shares may be
made by credit through full FAST transfer to the accounts at The Depository
Trust Company designated by the Representatives.
It is understood that you, individually, and not as the
Representatives of the several Underwriters, may (but shall not be obligated to)
make payment of the purchase price on behalf of any Underwriter or Underwriters
whose check or checks shall not have been received by you prior to the date of
payment and delivery for the Option Shares to be purchased by such Underwriter
or Underwriters. Any such payment by you shall not relieve any such Underwriter
or Underwriters of any of its or their obligations hereunder.
(b) Upon exercise of any option provided for in Section 7(a) hereof,
the obligations of the several Underwriters to purchase such Option Shares will
be subject (as of the date hereof and as of the date of payment and delivery for
such Option Shares) to the accuracy of and compliance with the representations,
warranties and agreements of the Company and the Selling Shareholders herein, to
the accuracy of the statements of the Company, the Selling Shareholders and
officers of the Company made pursuant to the provisions hereof, to the
performance by the Company and the Selling Shareholders of their respective
obligations hereunder, and to the condition that all proceedings taken at or
prior to the payment date in connection with the sale and transfer of such
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<PAGE>
Option Shares shall be satisfactory in form and substance to you and to
Underwriters' Counsel, and you shall have been furnished with all such
documents, certificates and opinions as you may request in order to evidence the
accuracy and completeness of any of the representations, warranties or
statements, the performance of any of the covenants or agreements of the Company
and the Selling Shareholders or the compliance with any of the conditions herein
contained.
8. Indemnification and Contribution.
--------------------------------
(a) The Company agrees to indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject (including, without limitation, in its
capacity as an Underwriter or as a "qualified independent underwriter" within
the meaning of Schedule E of the Bylaws of the NASD), under the Act, the
Exchange Act or otherwise, specifically including, but not limited to, losses,
claims, damages or liabilities (or actions in respect thereof) arising out of or
based upon (i) any breach of any representation, warranty, agreement or covenant
of the Company herein contained, (ii) any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement or any
amendment or supplement thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, or (iii) any untrue statement or alleged
untrue statement of any material fact contained in any Preliminary Prospectus or
the Prospectus or any amendment or supplement thereto, or the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, and agrees to reimburse each
Underwriter for any legal or other expenses reasonably incurred by it in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company shall not be liable in
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any such case to the extent that any such loss, claim, damage, liability or
action arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in the Registration Statement,
such Preliminary Prospectus or the Prospectus, or any such amendment or
supplement thereto, in reliance upon, and in conformity with, written
information relating to any Underwriter furnished to the Company by such
Underwriter, directly or through you, specifically for use in the preparation
thereof and, provided further, that the indemnity agreement provided in this
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Section 8(a) with respect to any Preliminary Prospectus shall not inure to the
benefit of any Underwriter from whom the person asserting any losses, claims,
damages, liabilities or actions based upon any untrue statement or alleged
untrue statement of material fact or omission or alleged omission to state
therein a material fact purchased Shares, if a copy of the Prospectus in which
such untrue statement or alleged untrue statement or omission or alleged
omission was corrected had not been sent or given to such person within the time
required by the Act and the Rules and Regulations, unless such failure is the
result of noncompliance by the Company with Section 4(d) hereof.
The indemnity agreement in this Section 8(a) shall extend upon the
same terms and conditions to, and shall inure to the benefit of, each person, if
any, who controls any Underwriter within the meaning of the Act or the Exchange
Act. This indemnity agreement shall be in addition to any liabilities which the
Company may otherwise have.
(b) Each Selling Shareholder, severally and not jointly, agrees to
indemnify and hold harmless each Underwriter against any losses, claims, damages
or liabilities, joint or several, to which such Underwriter may become subject
(including, without limitation, in its capacity as an Underwriter or as a
"qualified independent underwriter" within the meaning of Schedule E or the
Bylaws of the NASD) under the Act, the Exchange Act or otherwise, specifically
including, but not limited to, losses, claims, damages or liabilities, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon (i) any breach of any representation, warranty,
agreement or covenant of such Selling Shareholder herein contained, (ii) any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement or any amendment or supplement thereto, or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
(iii) any untrue statement or alleged untrue statement of any material fact
contained in any Preliminary Prospectus or the Prospectus or any amendment or
supplement thereto, or the omission or alleged omission to state therein a
material fact necessary to make the statements therein,
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<PAGE>
in the light of the circumstances under which they were made, not misleading, in
the case of subparagraphs (ii) and (iii) of this Section 8(b) to the extent, but
only to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company or such Underwriter by such Selling
Shareholder, directly or through such Selling Shareholder's representatives,
specifically for use in the preparation thereof, and agrees to reimburse each
Underwriter for any legal or other expenses reasonably incurred by it in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement provided in
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this Section 8(b) with respect to any Preliminary Prospectus shall not inure to
the benefit of any Underwriter from whom the person asserting any losses,
claims, damages, liabilities or actions based upon any untrue statement or
alleged untrue statement of a material fact or omission or alleged omission to
state therein a material fact purchased Shares, if a copy of the Prospectus in
which such untrue statement or alleged untrue statement or omission or alleged
omission was corrected had not been sent or given to such person within the time
required by the Act and the Rules and Regulations, unless such failure is the
result of noncompliance by the Company with Section 4(d) hereof.
The indemnity agreement in this Section 8(b) shall extend upon the
same terms and conditions to, and shall inure to the benefit of, each person, if
any, who controls any Underwriter within the meaning of the Act or the Exchange
Act. This indemnity agreement shall be in addition to any liabilities which
such Selling Shareholder may otherwise have.
(c) Each Underwriter, severally and not jointly, agrees to indemnify
and hold harmless the Company and each Selling Shareholder against any losses,
claims, damages or liabilities, joint or several, to which the Company or such
Selling Shareholder may become subject under the Act or otherwise, specifically
including, but not limited to, losses, claims, damages or liabilities, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon (i) any breach of any representation, warranty,
agreement or covenant of such Underwriter herein contained, (ii) any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement or any amendment or supplement thereto, or the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, or (iii) any
untrue statement or alleged untrue statement of any material fact contained in
any Preliminary Prospectus or the Prospectus or any amendment or supplement
thereto, or the omission or alleged omission to state therein a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, in the case of subparagraphs (ii)
and (iii) of this Section 8(c) to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission was
made in reliance upon and in conformity with written information furnished to
the Company by such Underwriter, directly or through you, specifically for use
in the preparation thereof, and agrees to reimburse the Company and each such
Selling Shareholder for any legal or other expenses reasonably incurred by the
Company and each such Selling Shareholder in connection with investigating or
defending any such loss, claim, damage, liability or action.
The indemnity agreement in this Section 8(c) shall extend upon the same
terms and conditions to, and shall inure to the benefit of, each officer of the
Company who signed the Registration Statement and each director of the Company,
each Selling Shareholder and each person, if any, who controls the Company or
any Selling Shareholder within the meaning of the Act or the Exchange Act. This
indemnity agreement shall be in addition to any liabilities which each
Underwriter may otherwise have.
(d) Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, such indemnified party shall, if
a claim in respect thereof is to be made against any indemnifying party under
this Section 8, notify the indemnifying party in writing of the commencement
thereof but the omission so to notify the indemnifying party will not relieve it
from any liability which it may have to any indemnified party otherwise than
under this Section 8. In case any such action is brought against any
indemnified party, and it notified the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it shall elect by written notice delivered to the indemnified
party promptly after receiving the aforesaid notice from such indemnified party,
to assume the defense thereof, with counsel
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reasonably satisfactory to such indemnified party; provided, however, that if
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the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of the indemnifying party's election so to assume the defense of such
action and approval by the indemnified party of counsel, the indemnifying party
will not be liable to such indemnified party under this Section 8 for any legal
or other expenses subsequently incurred by such indemnified party in connection
with the defense thereof unless (i) the indemnified party shall have employed
separate counsel in accordance with the proviso to the next preceding sentence
(it being understood, however, that the indemnifying party shall not be liable
for the expenses of more than one separate counsel (together with appropriate
local counsel) approved by the indemnifying party representing all the
indemnified parties under Section 8(a), 8(b) or 8(c) hereof who are parties to
such action), (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of commencement of the action or (iii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party. In no event shall any
indemnifying party be liable in respect of any amounts paid in settlement of any
action unless the indemnifying party shall have approved the terms of such
settlement; provided that such consent shall not be unreasonably withheld. No
--------
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which any indemnified party is or could have been a party and indemnification
could have been sought hereunder by such indemnified party, unless such
settlement includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such proceeding.
(e) In order to provide for just and equitable contribution in any
action in which a claim for indemnification is made pursuant to this Section 8
but it is judicially determined (by the entry of a final judgment or decree by a
court of competent jurisdiction and the expiration of time to appeal or the
denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 8 provides for
indemnification in such case, all the parties hereto shall contribute to the
aggregate losses, claims, damages or liabilities to which they may be subject
(after contribution from others) in such proportion so that, except as set forth
in Section 8(f) hereof, the Underwriters severally and not jointly are
responsible pro rata for the portion represented by the percentage that the
underwriting discount bears to the initial public offering price, and the
Company and the Selling Shareholders are responsible for the remaining portion,
provided, however, that (i) no Underwriter shall be required to contribute any
- -------- -------
amount in excess of the underwriting discount applicable to the Shares purchased
by such Underwriter in excess of the amount of damages which such Underwriter
has otherwise required to pay and (ii) no person guilty of a fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who is not guilty of such fraudulent
misrepresentation. The contribution agreement in this Section 8(e) shall extend
upon the same terms and conditions to, and shall inure to the benefit of, each
person, if any, who controls the Underwriters or the Company or any Selling
Shareholder within the meaning of the Act or the Exchange Act and each officer
of the Company who signed the Registration Statement and each director of the
Company and each officer of the Selling Shareholders who signed the Registration
Statement.
(f) The liability of each Selling Shareholder under the
representations, warranties and agreements contained herein and under the
indemnity agreements contained in the provisions of this Section 8 shall be
limited to an amount equal to the initial public offering price of the Selling
Shareholder Shares sold by such Selling Shareholder to the Underwriters. The
Company and such Selling Shareholders may agree, as among themselves and without
limiting the rights of the Underwriters under this Agreement, as to the
respective amounts of such liability for which they each shall be responsible.
(g) The parties to this Agreement hereby acknowledge that they are
sophisticated business persons who were represented by counsel during the
negotiations regarding the provisions hereof including, without limitation, the
provisions of this Section 8, and are fully informed regarding said provisions.
They further
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acknowledge that the provisions of this Section 8 fairly allocate the risks in
light of the ability of the parties to investigate the Company and its business
in order to assure that adequate disclosure is made in the Registration
Statement and Prospectus as required by the Act and the Exchange Act.
9. Representations, Warranties, Covenants and Agreements to Survive
----------------------------------------------------------------
Delivery. All representations, warranties, covenants and agreements of the
- --------
Company, the Selling Shareholders and the Underwriters herein or in certificates
delivered pursuant hereto, and the indemnity and contribution agreements
contained in Section 8 hereof shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any Underwriter
or any controlling person within the meaning of the Act or the Exchange Act, or
by or on behalf of the Company or any Selling Shareholder, or any of their
respective officers, directors or controlling persons within the meaning of the
Act or the Exchange Act, and shall survive the delivery of the Shares to the
several Underwriters hereunder or termination of this Agreement.
10. Substitution of Underwriters. If any Underwriter or Underwriters shall
----------------------------
fail to take up and pay for the number of Firm Shares agreed by such Underwriter
or Underwriters to be purchased hereunder upon tender of such Firm Shares in
accordance with the terms hereof, and if the aggregate number of Firm Shares
which such defaulting Underwriter or Underwriters so agreed but failed to
purchase does not exceed 10% of the Firm Shares, the remaining Underwriters
shall be obligated, severally in proportion to their respective commitments
hereunder, to take up and pay for the Firm Shares of such defaulting Underwriter
or Underwriters.
If any Underwriter or Underwriters so defaults and the aggregate number
of Firm Shares which such defaulting Underwriter or Underwriters agreed but
failed to take up and pay for exceeds 10% of the Firm Shares, the remaining
Underwriters shall have the right, but shall not be obligated, to take up and
pay for (in such proportions as may be agreed upon among them) the Firm Shares
which the defaulting Underwriter or Underwriters so agreed but failed to
purchase. If such remaining Underwriters do not, at the Closing Date, take up
and pay for the Firm Shares which the defaulting Underwriter or Underwriters so
agreed but failed to purchase, the Closing Date shall be postponed for twenty-
four (24) hours to allow the several Underwriters the privilege of substituting
within twenty-four (24) hours (including non-business hours) another underwriter
or underwriters (which may include any nondefaulting Underwriter) satisfactory
to the Company. If no such underwriter or underwriters shall have been
substituted as aforesaid by such postponed Closing Date, the Closing Date may,
at the option of the Company, be postponed for a further twenty-four (24) hours,
if necessary, to allow the Company the privilege of finding another underwriter
or underwriters, satisfactory to you, to purchase the Firm Shares which the
defaulting Underwriter or Underwriters so agreed but failed to purchase. If it
shall be arranged for the remaining Underwriters or substituted underwriter or
underwriters to take up the Firm Shares of the defaulting Underwriter or
Underwriters as provided in this Section 10, (i) the Company shall have the
right to postpone the time of delivery for a period of not more than seven (7)
full business days, in order to effect whatever changes may thereby be made
necessary in the Registration Statement or the Prospectus, or in any other
documents or arrangements, and the Company agrees promptly to file any
amendments to the Registration Statement or supplements to the Prospectus which
may thereby be made necessary, and (ii) the respective number of Firm Shares to
be purchased by the remaining Underwriters and substituted underwriter or
underwriters shall be taken as the basis of their underwriting obligation. If
the remaining Underwriters shall not take up and pay for all such Firm Shares so
agreed to be purchased by the defaulting Underwriter or Underwriters or
substitute another underwriter or underwriters as aforesaid and the Company
shall not find or shall not elect to seek another underwriter or underwriters
for such Firm Shares as aforesaid, then this Agreement shall terminate.
In the event of any termination of this Agreement pursuant to the
preceding paragraph of this Section 10, neither the Company nor any Selling
Shareholder shall be liable to any Underwriter (except as provided in Sections 5
and 8 hereof) nor shall any Underwriter (other than an Underwriter who shall
have failed, otherwise than for some reason permitted under this Agreement, to
purchase the number of Firm Shares agreed by such Underwriter to be purchased
hereunder, which Underwriter shall remain liable to the Company, the Selling
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Shareholders and the other Underwriters for damages, if any, resulting from such
default) be liable to the Company or any Selling Shareholder (except to the
extent provided in Sections 5 and 8 hereof).
The term "Underwriter" in this Agreement shall include any person
substituted for an Underwriter under this Section 10.
11. Effective Date of this Agreement and Termination.
------------------------------------------------
(a) This Agreement shall become effective at the earlier of (i) 6:30
A.M., San Francisco time, on the first full business day following the effective
date of the Registration Statement, or (ii) the time of the initial public
offering of any of the Shares by the Underwriters after the Registration
Statement becomes effective. The time of the initial public offering shall mean
the time of the release by you, for publication, of the first newspaper
advertisement relating to the Shares, or the time at which the Shares are first
generally offered by the Underwriters to the public by letter, telephone,
telegram or telecopy, whichever shall first occur. By giving notice as set
forth in Section 12 before the time this Agreement becomes effective, you, as
Representatives of the several Underwriters, or the Company, may prevent this
Agreement from becoming effective without liability of any party to any other
party, except as provided in Sections 4(j), 5 and 8 hereof.
(b) You, as Representatives of the several Underwriters, shall have
the right to terminate this Agreement by giving notice as hereinafter specified
at any time at or prior to the Closing Date or on or prior to any later date on
which Option Shares are to be purchased, as the case may be, (i) if the Company
or any Selling Shareholder shall have failed, refused or been unable to perform
any agreement on its part to be performed, or because any other condition of the
Underwriters' obligations hereunder required to be fulfilled is not fulfilled,
including, without limitation, any change in the condition (financial or
otherwise), earnings, operations, business or business prospects of the Company
and its subsidiaries considered as one enterprise from that set forth in the
Registration Statement or Prospectus, which, in your sole judgment, is material
and adverse, or (ii) if additional material governmental restrictions, not in
force and effect on the date hereof, shall have been imposed upon trading in
securities generally or minimum or maximum prices shall have been generally
established on the New York Stock Exchange or on the American Stock Exchange or
in the over the counter market by the NASD, or trading in securities generally
shall have been suspended on either such exchange or in the over the counter
market by the NASD, or if a banking moratorium shall have been declared by
federal, New York or California authorities, or (iii) if the Company shall have
sustained a loss by strike, fire, flood, earthquake, accident or other calamity
of such character as to interfere materially with the conduct of the business
and operations of the Company regardless of whether or not such loss shall have
been insured, or (iv) if there shall have been a material adverse change in the
general political or economic conditions or financial markets as in your
reasonable judgment makes it inadvisable or impracticable to proceed with the
offering, sale and delivery of the Shares, or (v) if there shall have been an
outbreak or escalation of hostilities or of any other insurrection or armed
conflict or the declaration by the United States of a national emergency which,
in the reasonable opinion of the Representatives, makes it impracticable or
inadvisable to proceed with the public offering of the Shares as contemplated by
the Prospectus. In the event of termination pursuant to subparagraph (i) above,
the Company shall remain obligated to pay costs and expenses pursuant to
Sections 4(j), 5 and 8 hereof. Any termination pursuant to any of subparagraphs
(ii) through (v) above shall be without liability of any party to any other
party except as provided in Sections 5 and 8 hereof.
If you elect to prevent this Agreement from becoming effective or to
terminate this Agreement as provided in this Section 11, you shall promptly
notify the Company by telephone, telecopy or telegram, in each case confirmed by
letter. If the Company shall elect to prevent this Agreement from becoming
effective, the Company shall promptly notify you by telephone, telecopy or
telegram, in each case, confirmed by letter.
12. Notices. All notices or communications hereunder, except as herein
-------
otherwise specifically provided, shall be in writing and if sent to you shall be
mailed, delivered, telegraphed (and confirmed by letter) or telecopied (and
confirmed by letter) to you c/o Robertson, Stephens & Company LLC, 555
California Street, Suite 2600, San Francisco, California 94104, telecopier
number (415) 781-0278, Attention: General Counsel; if sent to the
-28-
<PAGE>
Company, such notice shall be mailed, delivered, telegraphed (and confirmed by
letter) or telecopied (and confirmed by letter) to Travis Boats & Motors, Inc.,
13045 Research Boulevard, Austin, Texas 78750, telecopier number (512) 250-1207,
Attention: Mark T. Walton, Chairman of the Board and President; if sent to one
or more of the Selling Shareholders, such notice shall be sent mailed,
delivered, telegraphed (and confirmed by letter) or telecopied (and confirmed by
letter) to Mr. Mark T. Walton, as Attorney-in-Fact for the Selling Shareholders,
at 13045 Research Boulevard, Austin, Texas 78750, telecopier number
(512) 250-1207.
13. Parties. This Agreement shall inure to the benefit of and be binding
-------
upon the several Underwriters and the Company and the Selling Shareholders and
their respective executors, administrators, successors and assigns. Nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any person or corporation, other than the parties hereto and their
respective executors, administrators, successors and assigns, and the
controlling persons within the meaning of the Act or the Exchange Act, officers
and directors referred to in Section 8 hereof, any legal or equitable right,
remedy or claim in respect of this Agreement or any provisions herein contained,
this Agreement and all conditions and provisions hereof being intended to be and
being for the sole and exclusive benefit of the parties hereto and their
respective executors, administrators, successors and assigns and said
controlling persons and said officers and directors, and for the benefit of no
other person or corporation. No purchaser of any of the Shares from any
Underwriter shall be construed a successor or assign by reason merely of such
purchase.
In all dealings with the Company and the Selling Shareholders under this
Agreement, you shall act on behalf of each of the several Underwriters, and the
Company and the Selling Shareholders shall be entitled to act and rely upon any
statement, request, notice or agreement made or given by you jointly or by
Robertson, Stephens & Company LLC on behalf of you.
14. Applicable Law. This Agreement shall be governed by, and construed in
--------------
accordance with, the laws of the State of California.
15. Counterparts. This Agreement may be signed in several counterparts,
------------
each of which will constitute an original.
-29-
<PAGE>
If the foregoing correctly sets forth the understanding among the
Company, the Selling Shareholders and the several Underwriters, please so
indicate in the space provided below for that purpose, whereupon this letter
shall constitute a binding agreement among the Company, the Selling Shareholders
and the several Underwriters.
Very truly yours,
TRAVIS BOATS & MOTORS, INC.
By
---------------------------------------------
Mark T. Walton, President
LIST OF SELLING SHAREHOLDERS
By
---------------------------------------------
Attorney-in-Fact for the Selling Shareholders
named in Schedule B hereto
Accepted as of the date first above written:
ROBERTSON, STEPHENS & COMPANY LLC
PRINCIPAL FINANCIAL SECURITIES, INC.
On their behalf and on behalf of each of the
several Underwriters named in Schedule A hereto.
ROBERTSON, STEPHENS & COMPANY LLC
By ROBERTSON, STEPHENS & COMPANY GROUP, L.L.C.
By ---------------------------------------------
Authorized Signatory
-30-
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
Number of
Firm Shares
To Be
Underwriters Purchased
- ---------------------------------------- -----------
<S> <C>
Robertson, Stephens & Company LLC ......
Principal Financial Securities, Inc. ...
---------
Total.............................. 1,750,000
=========
</TABLE>
<PAGE>
SCHEDULE B
<TABLE>
<CAPTION>
Number of
Company
Shares To
Company Be Sold
- --------------------------- ---------
<S> <C>
---------
Total..............................
=========
Name of Selling Shareholder
- ---------------------------
---------
Total..............................
=========
</TABLE>
<PAGE>
EXHIBIT 3.1
THE STATE OF TEXAS
SECRETARY OF STATE
CERTIFICATE OF RESTATED ARTICLES
OF INCORPORATION
OF
TRAVIS BOATS & MOTORS, INC.
The undersigned, as Secretary of State of Texas, hereby certifies that the
attached Restated Articles of Incorporation for the above named corporation have
been received in this office and are found to conform to law.
ACCORDINGLY the undersigned, as Secretary of State, and by virtue of the
authority vested in the Secretary by law, hereby issues this Certificate of
Restated Articles of Incorporation.
Dated: December 14, 1995
Effective: December 14, 1995
/s/ ANTONIO O. GARZA, JR.
---------------------------------------
Antonio O. Garza, Jr.
Secretary of State
<PAGE>
TRAVIS BOATS & MOTORS, INC.
RESTATED ARTICLES OF INCORPORATION
Pursuant to the provisions of Article 4.07 of the Texas Business
Corporation Act, Travis Boats & Motors, Inc., a Texas corporation (the
"Corporation"), hereby adopts these Restated Articles of Incorporation (the
"Restated Articles"), which accurately reflect the original Articles of
Incorporation and all amendments thereto that are in effect to date
(collectively, the "Original Articles") and as further amended by such Restated
Articles as hereinafter set forth and which contain no other change in any
provision thereof.
ARTICLE I
---------
The name of the Corporation is Travis Boats & Motors, Inc.
ARTICLE II
----------
The Original Articles are amended by these Restated Articles as follows:
(a) Article Four is amended in its entirety to decrease the par value of the
common stock of the Corporation from $0.10 to $0.01, to increase the number of
authorized shares of preferred stock from 10,000 to 1,000,000, to decrease the
par value of the preferred stock of the Corporation from $100.00 to $0.01 and to
vest in the Board of Directors the authority to issue preferred stock in one or
more series and to set the designations, rights and preferences of the preferred
stock; (b) Article Seven is amended in its entirety to change the number of
directors of the Corporation from six to seven; (c) Article Eight of the
Original Articles is deleted in its entirety and a new Article Eight is added to
deny preemptive rights; (d) Article Nine is added to prohibit cumulative voting;
(e) Article Ten is added regarding transactions between the Corporation and its
directors or officers; (f) Article Eleven is added to state indemnification
provisions; (g) Article Twelve is added to address required voting percentages;
(h) Article Thirteen is added to limit director liability; (i) Article Fourteen
is added to permit written consents by shareholders; (j) Article Fifteen is
added regarding special meetings of shareholders; and (k) Article Sixteen is
added regarding adoption, revision and repeal of bylaws.
<PAGE>
ARTICLE III
-----------
Each such amendment made by the Restated Articles has been effected in
conformity with the provisions of the Texas Business Corporation Act and the
Restated Articles and each amendment made by the Restated Articles were duly
adopted by the shareholders of the Corporation December ___ 1995.
ARTICLE IV
----------
The number of shares outstanding was 2,012,624, all of which were entitled
to vote on the Restated Articles as so amended. Shareholders representing all
of the outstanding shares of each class of capital stock have signed a written
consent to the adoption of such restated articles of incorporation as so amended
pursuant to Article 9.10 and any written notice required by Article 9.10 has
been given.
ARTICLE V
---------
The Original Articles are hereby superseded by the following Restated
Articles, which accurately copy the entire text thereof as amended as set forth
above:
RESTATED ARTICLES OF INCORPORATION
OF
TRAVIS BOATS & MOTORS, INC.
ARTICLE ONE
-----------
The name of the Corporation is Travis Boats & Motors, Inc.
ARTICLE TWO
-----------
The period of its duration is perpetual.
ARTICLE THREE
-------------
The purpose or purposes for which the Corporation is organized are the
transaction of any and all lawful business for which a corporation may be
incorporated under the Texas Business Corporation Act.
2
<PAGE>
ARTICLE FOUR
------------
The aggregate number of shares which the Corporation shall have the
authority to issue is 51,000,000 shares, consisting of (i) 50,000,000 shares of
common stock, $0.01 par value, and (ii) 1,000,000 shares of preferred stock,
$0.01 par value.
The following is a statement of the designations, preferences, limitations,
and relative rights, including voting rights, in respect of the classes of stock
of the Corporation and of the authority with respect thereto expressly vested in
the Board of Directors of the Corporation:
COMMON STOCK
(1) Each share of Common Stock of the Corporation shall have identical
rights and privileges in every respect. The holders of shares of Common Stock
shall be entitled to vote upon all matters submitted to a vote of the
shareholders of the Corporation and shall be entitled to one vote for each share
of Common Stock held.
(2) Subject to the prior rights and preferences, if any, applicable to
shares of the Preferred Stock or any series thereof, the holders of shares of
the Common Stock shall be entitled to receive such dividends (payable in cash,
stock, or otherwise) as may be declared thereon by the Board of Directors at any
time and from time to time out of any funds of the Corporation legally available
therefor.
(3) In the event of any voluntary or involuntary liquidation, dissolution,
or winding-up of the Corporation, after distribution in full of the preferential
amounts, if any, to be distributed to the holders of shares of the Preferred
Stock or any series thereof, the holders of shares of the Common Stock shall be
entitled to receive all of the remaining assets of the Corporation available for
distribution to its shareholders, ratably in proportion to the number of shares
of the Common Stock held by them. A liquidation, dissolution, or winding-up of
the Corporation, as such terms are used in this Paragraph (3), shall not be
deemed to be occasioned by or to include any merger of the Corporation with or
into one or more corporations or other entities, any acquisition or exchange of
the outstanding shares of one or more classes or series of the Corporation, or
any sale, lease, exchange, or other disposition of all or a part of the assets
of the Corporation.
PREFERRED STOCK
(4) Shares of the Preferred Stock may be issued from time to time in one or
more series, the shares of each series to have such designations, preferences,
limitations, and relative rights, including voting rights, as shall be stated
and expressed herein or in a resolution or resolutions providing for the issue
of such series adopted by the Board of Directors of the Corporation. Each such
series of Preferred Stock shall be designated so as to distinguish the shares
thereof from the shares of all other series and classes. The Board of Directors
of the Corporation is hereby expressly authorized, subject to the limitations
provided by law, to establish and designate series of the Preferred Stock, to
fix the number of shares constituting each series, and to fix the designations
and the preferences, limitations, and relative rights,
3
<PAGE>
including voting rights, of the shares of each series and the variations of the
relative rights and preferences as between series, and to increase and to
decrease the number of shares constituting each series, provided that the Board
of Directors may not decrease the number of shares within a series to less than
the number of shares within such series that are then issued. The relative
powers, rights, preferences, and limitations may vary between and among series
of Preferred Stock in any and all respects so long as all shares of the same
series are identical in all respects, except that shares of any such series
issued at different times may have different dates from which dividends thereon
cumulate. The authority of the Board of Directors of the Corporation with
respect to each series shall include, but shall not be limited to, the authority
to determine the following:
(a) The designation of such series;
(b) The number of shares initially constituting such series;
(c) The rate or rates and the times at which dividends on the shares
of such series shall be paid, the periods in respect of which dividends
are payable, the conditions upon such dividends, the relationship and
preferences, if any, of such dividends to dividends payable on any other
class or series of shares, whether or not such dividends shall be
cumulative, partially cumulative, or noncumulative, if such dividends shall
be cumulative or partially cumulative, the date or dates from and after
which, and the amounts in which, they shall accumulate, whether such
dividends shall be share dividends, cash or other dividends, or any
combination thereof, and if such dividends shall include share dividends,
whether such share dividends shall be payable in shares of the same or any
other class or series of shares of the Corporation (whether now or
hereafter authorized), or any combination thereof, and the other terms and
conditions, if any, applicable to dividends on shares of such series;
(d) Whether or not the shares of such series shall be redeemable or
subject to repurchase at the option of the Corporation or the holder
thereof or upon the happening of a specified event, if such shares shall be
redeemable, the terms and conditions of such redemption, including but not
limited to the date or dates upon or after which such shares shall be
redeemable, the amount per share which shall be payable upon such
redemption, which amount may vary under different conditions and at
different redemption dates, and whether such amount shall be payable in
cash, property, or rights, including securities of the Corporation or
another corporation;
(e) The rights of the holders of shares of such series (which may vary
depending upon the circumstances or nature of such liquidation,
dissolution, or winding up) in the event of the voluntary or involuntary
liquidation, dissolution, or winding up of the Corporation and the
relationship or preference, if any, of such rights to rights of holders of
stock of any other class or series. A liquidation, dissolution, or winding
up of the Corporation, as such terms are used in this subparagraph (e),
shall not be deemed to be occasioned by or to include any merger of the
Corporation with or into one or more corporations or other entities, any
acquisition or exchange of the outstanding shares of one or more classes or
series of the Corporation, or any sale, lease, exchange, or other
disposition of all or a part of the assets of the Corporation;
4
<PAGE>
(f) Whether or not the shares of such series shall have voting powers
and, if such shares shall have such voting powers, the terms and conditions
thereof, including, but not limited to, the right of the holders of such
shares to vote as a separate class either alone or with the holders of
shares of one or more other classes or series of stock and the right to
have more (or less) than one vote per share; provided, however, that the
right to cumulate votes for the election of directors is expressly denied
and prohibited;
(g) Whether or not a sinking fund shall be provided for the redemption
of the shares of such series and, if such a sinking fund shall be provided,
the terms and conditions thereof;
(h) Whether or not a purchase fund shall be provided for the shares of
such series and, if such a purchase fund shall be provided, the terms and
conditions thereof;
(i) Whether or not the shares of such series, at the option of either
the Corporation or the holder or upon the happening of a specified event,
shall be convertible into stock of any other class or series and, if such
shares shall be so convertible, the terms and conditions of conversion,
including, but not limited to, any provision for the adjustment of the
conversion rate or the conversion price;
(j) Whether or not the shares of such series, at the option of either
the Corporation or the holder or upon the happening of a specified event,
shall be exchangeable for securities, indebtedness, or property of the
Corporation and, if such shares shall be so exchangeable, the terms and
conditions of exchange, including, but not limited to, any provision for
the adjustment of the exchange rate or the exchange price; and
(k) Any other preferences, limitations, and relative rights as shall
not be inconsistent with the provisions of this Article Four or the
limitations provided by law.
(5) Except as otherwise required by law or in any resolution of the Board
of Directors creating any series of Preferred Stock, the holders of shares of
Preferred Stock and all series thereof who are entitled to vote shall vote
together with the holders of shares of Common Stock, and not separately by
class.
ARTICLE FIVE
------------
The Corporation will not commence business until it has received
consideration of the value of $1,000.00, consisting of money, labor done or
property actually received, for the issuance of its shares.
ARTICLE SIX
-----------
The street address of the Corporation's registered office is 13045 Research
Boulevard, Austin, Texas 78750, and the name of its registered agent at that
address is Mark T. Walton.
5
<PAGE>
ARTICLE SEVEN
-------------
The number of directors shall be set forth in the bylaws of the Corporation
and, until amended, shall be five. The name and address of each director is:
Mark T. Walton 13045 Research Boulevard, Austin, Texas 78750
E.D. Bohls 13045 Research Boulevard, Austin, Texas 78750
Joseph E. Simpson 13045 Research Boulevard, Austin, Texas 78750
Robert C. Siddons 13045 Research Boulevard, Austin, Texas 78750
Ron Spradling 13045 Research Boulevard, Austin, Texas 78750
ARTICLE EIGHT
-------------
No holder of any shares of capital stock of the Corporation, whether now or
hereafter authorized, shall, as such holder, have any preemptive or preferential
right to receive, purchase, or subscribe to (a) any unissued or treasury shares
of any class of stock (whether now or hereafter authorized) of the Corporation,
(b) any obligations, evidences of indebtedness, or other securities of the
Corporation convertible into or exchangeable for, or carrying or accompanied by
any rights to receive, purchase, or subscribe to, any such unissued or treasury
shares, (c) any right of subscription to or to receive, or any warrant or option
for the purchase of, any of the foregoing securities, or (d) any other
securities that may be issued or sold by the Corporation.
ARTICLE NINE
------------
Cumulative voting for the election of directors is expressly denied and
prohibited.
ARTICLE TEN
-----------
No contract or transaction between the Corporation and one or more of its
directors or officers, or between the Corporation and any other corporation,
partnership, association, or other organization in which one or more of its
directors or officers are directors or officers or have a financial interest,
shall be void or voidable solely for this reason, solely because the director or
officer is present at or participates in the meeting of the Board of Directors
or committee thereof which authorizes the contract or transaction, or solely
because his or their votes are counted for such purpose, if:
(a) The material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to the Board of
Directors or the committee, and the Board of Directors or committee in good
faith authorizes the contract or transaction by the affirmative vote of a
majority of the disinterested directors, even though the disinterested
directors be less than a quorum; or
(b) The material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to the shareholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the shareholders; or
6
<PAGE>
(c) The contract or transaction is fair as to the Corporation as of
the time it is authorized, approved, or ratified by the Board of Directors,
a committee thereof, or the shareholders.
Common or interested directors may be counted in determining the presence of a
quorum at a meeting of the Board of Directors or of a committee which authorizes
the contract or transaction.
This provision shall not be construed to invalidate a contract or
transaction which would be valid in the absence of this provision or to subject
any director or officer to any liability that he would not be subject to in the
absence of this provision.
ARTICLE ELEVEN
--------------
The Corporation shall have the power and authority to indemnify any person
to the fullest extent permitted by law.
ARTICLE TWELVE
--------------
Any action of the Corporation which, under the provisions of the Texas
Business Corporation Act or any other applicable law, is required to be
authorized or approved by the holders of any specified fraction which is in
excess of one-half or any specified percentage which is in excess of fifty
percent of the outstanding shares (or of any class or series thereof) of the
Corporation shall, notwithstanding any law, be deemed effectively and properly
authorized or approved if authorized or approved by the vote of the holders of
more than fifty percent of the outstanding shares entitled to vote thereon (or,
if the holders of any class or series of the Corporation's shares shall be
entitled by the Texas Business Corporation Act or any other applicable law to
vote thereon separately as a class, by the vote of the holders of more than
fifty percent of the outstanding shares of each such class or series). Without
limiting the generality of the foregoing, the foregoing provisions of this
Article Twelve shall be applicable to any required shareholder authorization or
approval of: (a) any amendment to these articles of incorporation; (b) any plan
of merger, share exchange, or reorganization involving the Corporation; (c) any
sale, lease, exchange, or other disposition of all, or substantially all, the
property and assets of the Corporation; and (d) any voluntary dissolution of the
Corporation.
Directors of the Corporation shall be elected by a plurality of the votes
cast by the holders of shares entitled to vote in the election of directors of
the Corporation at a meeting of shareholders at which a quorum is present.
Except as otherwise provided in this Article Twelve or as otherwise
required by the Texas Business Corporation Act or other applicable law, with
respect to any matter, the affirmative vote of the holders of a majority of the
Corporation's shares entitled to vote on, and voted for or against, at a meeting
of shareholders at which a quorum is present shall be the act of the
shareholders.
Nothing contained in this Article Twelve is intended to require shareholder
authorization or approval of any action of the Corporation whatsoever unless
such approval is specifically
7
<PAGE>
required by the other provisions of these articles of incorporation, the bylaws
of the Corporation, or by the Texas Business Corporation Act or other applicable
law.
ARTICLE THIRTEEN
----------------
To the fullest extent permitted by applicable law, a director of the
Corporation shall not be liable to the Corporation or its shareholders for
monetary damages for an act or omission in the director's capacity as a
director, except that this Article Thirteen does not eliminate or limit the
liability of a director of the Corporation to the extent the director is found
liable for:
(a) a breach of the director's duty of loyalty to the Corporation or
its shareholders;
(b) an act or omission not in good faith that constitutes a breach of
duty of the director to the Corporation or an act or omission that involves
intentional misconduct or a knowing violation of the law;
(c) a transaction from which the director received an improper
benefit, whether or not the benefit resulted from an action taken within
the scope of the director's office; or
(d) an act or omission for which the liability of a director is
expressly provided by an applicable statute.
Any repeal or amendment of this Article Thirteen by the shareholders of the
Corporation shall be prospective only and shall not adversely affect any
limitation on the personal liability of a director of the Corporation arising
from an act or omission occurring prior to the time of such repeal or amendment.
In addition to the circumstances in which a director of the Corporation is not
personally liable as set forth in the foregoing provisions of this Article
Thirteen, a director shall not be liable to the Corporation or its shareholders
to such further extent as permitted by any law hereafter enacted, including
without limitation any subsequent amendment to the Texas Miscellaneous
Corporation Laws Act or the Texas Business Corporation Act. The foregoing
provisions of this Article Thirteen shall not authorize the elimination or
limitation of the liability of a director of the Corporation for any act or
omission occurring prior to August 31, 1987.
ARTICLE FOURTEEN
----------------
Any action which may be taken, or which is required by law or the Articles
of Incorporation or bylaws of the Corporation to be taken, at any annual or
special meeting of shareholders may be taken without a meeting, without prior
notice, and without a vote, if a consent or consents in writing, setting forth
the action so taken, shall have been signed by the holder or holders of shares
having not less than the minimum number of votes that would be necessary to take
such action at a meeting at which the holders of all shares entitled to vote on
the action were present and voted.
8
<PAGE>
ARTICLE FIFTEEN
---------------
A special meeting of the shareholders of the Corporation may only be
called by the President or Board of Directors of the Corporation or the holders
of not less than 25 percent of all the shares entitled to vote at the proposed
special meeting or by such other person or persons as may be so authorized by
the bylaws of the Corporation.
ARTICLE SIXTEEN
---------------
The power to amend or repeal the Corporation's bylaws and to adopt new
bylaws shall be reserved exclusively to the Board of Directors of the
Corporation.
ARTICLE VI
----------
The foregoing change of the par value of the Corporation's Common Stock
from $0.10 per share to $0.01 per share reduces the Corporation's stated capital
from $201,262.40 to $20,126.24.
EXECUTED as of ____________, 1995.
TRAVIS BOATS & MOTORS, INC.
By: ___________________________________
Mark T. Walton, President
9
<PAGE>
EXHIBIT 3.2
Amended and Restated
May 3, 1996
SECOND AMENDED AND RESTATED
BYLAWS OF
TRAVIS BOATS & MOTORS, INC.
1. Offices
-------
1.1 Principal Office. The principal office of the Corporation shall be
----------------
located in Austin, Texas.
1.2 Other Office. The Corporation may also have offices at such other
------------
places within or without the State of Texas as the board of directors may from
time to time determine or the business of the Corporation may require.
2. Meetings of Shareholders
------------------------
2.1 Annual Meeting. The annual meeting of shareholders for the election
--------------
of directors and such other business as may properly be brought before the
meeting shall be held at such place within or without the State of Texas and at
such date and time as shall be designated by the board of directors and stated
in the notice of the meeting or in a duly executed waiver of notice thereof.
2.2 Special Meetings. Special meetings of the shareholders may be called
----------------
(a) by the president or the board of directors, or (b) by the holders of at
least 25% of all the shares entitled to vote at the proposed meeting. The
record date for determining shareholders entitled to call a special meeting
shall be the date the first shareholder signs the call and notice of that
meeting. Only business within the purpose or purposes described in the notice
of a special meeting of shareholders may be conducted at such meeting.
2.3 Notice and Waivers of Notice.
----------------------------
(a) Written notice stating the place, date and hour of the meeting and, in
the case of a special meeting, the purpose or purposes for which the meeting is
called, shall be delivered not less than 10 nor more than 60 days before the
date of the meeting, either personally or by mail, by or at the direction of the
president, the secretary, or the officer or persons calling the meeting, to each
shareholder entitled to vote at such meeting. If mailed, such notice shall be
deemed to be delivered when deposited in the United States mail addressed to the
shareholder at his address as it appears on the share transfer records of the
Corporation.
(b) Notice may be waived in writing signed by the person or persons
entitled to such notice. Such waiver may be executed at any time before or
after the holding of such meeting. Attendance at a meeting shall constitute a
waiver of notice, except where the person attends for
<PAGE>
the express purpose of objecting to the transaction of any business on the
ground that the meeting is not lawfully called.
(c) Any notice required to be given to any shareholder, under any provision
of the Texas Business Corporation Act, as amended (the "Act"), the Articles of
Incorporation or these Bylaws, need not be given to the shareholder if (1)
notice of two consecutive annual meetings and all notices of meetings held
during the period between those annual meetings, if any, or (2) all (but in no
event less than two) payments (if sent by first class mail) of distributions or
interest on securities during a 12-month period have been mailed to that person,
addressed at his address as shown on the records of the Corporation, and have
been returned undeliverable. Any action or meeting taken or held without notice
to such a person shall have the same force and effect as if the notice had been
duly given and, if the action taken by the Corporation is reflected in any
articles or document filed with the Secretary of State, those articles or that
document may state that notice was duly given to all persons to whom notice was
required to be given. If such a person delivers to the Corporation a written
notice setting forth his then current address, the requirement that notice be
given to that person shall be reinstated.
2.4 Record Date. For the purpose of determining shareholders entitled to
-----------
notice of or to vote at any meeting of shareholders or any adjournment thereof,
or entitled to receive payment of any dividend, the board of directors may in
advance establish a record date which must be at least 10 but not more than 60
days prior to such meeting. If the board of directors fail to establish a
record date, the record date shall be the date on which notice of the meeting is
mailed.
2.5 Voting List.
-----------
(a) The officer or agent having charge of the stock transfer books for
shares of the Corporation shall make, at least ten days before each meeting of
shareholders, a complete list of the shareholders entitled to vote at such
meeting or any adjournment thereof, arranged in alphabetical order, with the
address of and the number of shares held by each, which list, for a period of
ten days prior to such meeting, shall be kept on file at the registered office
of the Corporation and shall be subject to inspection by any shareholder at any
time during usual business hours. Such list shall also be produced and kept
open at the time and place of the meeting and shall be subject to the inspection
of any shareholder during the whole time of the meeting. The original stock
transfer book shall be prima facie evidence as to who are the shareholders
entitled to examine such list or transfer books or vote at any meeting of
shareholders.
(b) Failure to comply with the requirements of this section shall not
affect the validity of any action taken at such meeting.
(c) An officer or agent having charge of the stock transfer books who shall
fail to prepare the list of shareholders or keep the same on file for a period
of ten days, or produce and keep it open for inspection as provided in this
section, shall be liable to any shareholder suffering damage on account of such
failure, to the extent of such damage. In the event that such officer or agent
does not receive notice of a meeting of shareholders sufficiently in advance of
the date of such meeting reasonably to enable him to comply with the duties
prescribed by these Bylaws,
<PAGE>
the Corporation, but not such officer or agent shall be liable to any
shareholder suffering damage on account of such failure, to the extent of such
damage.
2.6 Quorum of Shareholders. With respect to any matter, a quorum shall be
----------------------
present at a meeting of shareholders if the holders of a majority of the shares
entitled to vote on that matter are represented at the meeting, in person or by
proxy, unless otherwise provided in the Articles of Incorporation in accordance
with the Act. Unless otherwise provided in the Articles of Incorporation, the
shareholders represented in person or by proxy at a meeting of shareholders at
which a quorum is not present may adjourn the meeting until such time and to
such place as may be determined by a vote of the holders of a majority of the
shares represented in person or by proxy at that meeting.
2.7 Withdrawal of Quorum. Unless otherwise provided in the Articles of
--------------------
Incorporation, once a quorum is present at a meeting of shareholders, the
shareholders represented in person or by proxy at the meeting may conduct such
business as may properly be brought before the meeting until it is adjourned,
and the subsequent withdrawal from the meeting of any shareholder or the refusal
of any shareholder represented in person or by proxy to vote shall not effect
the presence of a quorum at the meeting.
2.8 Voting on Matters Other Than the Election of Directors. With respect
------------------------------------------------------
to any matter, other than the election of directors or a matter for which the
affirmative vote of the holders of a specified portion of the shares entitled to
vote is required by the Act, the affirmative vote of the holders of a majority
of the shares represented in person or by proxy at a meeting of shareholders at
which a quorum is present shall be the act of the shareholders, unless otherwise
provided in the Articles of Incorporation.
2.9 Voting in the Election of Directors. Directors shall be elected in
-----------------------------------
the manner provided in the Articles of Incorporation.
2.10 Method of Voting. The holders of outstanding shares of capital stock
----------------
of the Corporation shall be entitled to vote on matters submitted to a vote of
shareholders as provided in the Articles of Incorporation. Any shareholder may
vote either in person or by proxy executed in writing by the shareholder. No
proxy shall be valid after 11 months from the date of its execution, unless
otherwise provided in the proxy.
2.11 Action Without Meetings.
-----------------------
(a) To the extent so provided in the Articles of Incorporation, any action
required by law to be taken at any annual or special meeting of shareholders, or
any action that may be taken at any annual or special meeting of shareholders,
may be taken without a meeting, without prior notice, and without a vote, if a
consent or consents in writing, setting forth the action so taken, shall be
signed by the holder or holders of shares having not less than the minimum
number of votes that would be necessary to take such action at a meeting at
which the holders of all shares entitled to vote on the action were present or
represented and voted.
<PAGE>
(b) Every written consent shall bear the date of signature of each
shareholder who signs the consent. No written consent shall be effective to
take the action that is the subject of the consent unless, within 60 days after
the date of the earliest dated consent delivered to the Corporation in the
manner required by law, a consent or consents signed by the holder or holders of
shares having not less than the minimum number of votes that would be necessary
to take the action that is the subject of the consent delivered to the
Corporation by delivery to its registered office, to its principal office or to
an officer or agent of the Corporation having custody of the books in which
proceedings of meetings of shareholders are recorded. Delivery shall be by hand
or certified or registered mail, return receipt requested. Delivery to the
Corporation's principal office shall be addressed to the president or the chief
executive officer of the Corporation.
(c) A telegram, telex, cablegram, or similar transmission by a
shareholder, or a photographic, photostatic, facsimile, or similar reproduction
of a writing signed by a shareholder, shall be regarded as signed by the
shareholder for purposes of this section.
(d) Prompt notice of the taking of any action by shareholders without a
meeting by less than unanimous written consent shall be given to those
shareholders who did not consent in writing to the action.
2.12 Conduct of Meeting. The Chairman of the Board, if such office has
------------------
been filled, and, if not or if the Chairman of the Board is absent or otherwise
unable to act, the President shall preside at all meetings of shareholders. The
Secretary shall keep the records of each meeting of shareholders. In the
absence or inability to act of any such officer, such officer's duties shall be
performed by the officer given the authority to act for such absent or non-
acting officer under these bylaws or by a person appointed by the meeting.
2.13 Shareholder Proposals at Annual Meetings. At an annual meeting of the
----------------------------------------
shareholders, only such business shall be conducted as shall have been properly
brought before the meeting. To be properly brought before an annual meeting,
business must be specified in the notice of meeting (or any supplement thereto)
given by or at the direction of the board of directors, otherwise properly
brought before the meeting by or at the direction of the board of directors or
otherwise properly brought before the meeting by a shareholder. In addition to
any other applicable requirements, for business to be properly brought before an
annual meeting by a shareholder, the shareholder must have given timely notice
thereof in writing to the Secretary of the Corporation. To be timely, a
shareholder's notice must be delivered to or mailed and received at the
principal executive offices of the corporation not less than 30 days nor more
than 60 days prior to the meeting; provided, however, that in the event that
less than 40 day's notice or prior public disclosure of the date of the meeting
is given or made to shareholders, notice by the shareholder to be timely must be
so received not later than the close of business on the 10th day following the
day on which such notice of the date of the annual meeting was mailed or such
public disclosure was made. A shareholder's notice to the Secretary shall set
forth as to each matter the shareholder proposes to bring before the annual
meeting, (i) a brief description of the business desired to be brought before
the annual meeting and the reasons for conducting such business at the annual
meeting, (ii) the name and record address of the shareholder proposing such
business, (iii) the class and number of shares of the Corporation that are
beneficially owned by
<PAGE>
the shareholder, and (iv) any material interest of the shareholder in such
business. Notwithstanding anything in these bylaws to the contrary, no business
shall be conducted at the annual meeting except in accordance with the
procedures set forth in this section 2.13, provided, however, that nothing in
this section 2.13 shall be deemed to preclude discussion by any shareholder of
any business properly brought before the annual meeting in accordance with said
procedure.
2.14 Nominations of Persons for Election to the Board of Directors. In
-------------------------------------------------------------
addition to any other applicable requirements, only persons who are nominated in
accordance with the following procedures shall be eligible for election as
directors. Nominations of persons for election to the board of directors of the
Corporation may be made at a meeting of shareholders by or at the direction of
the board of directors, by any nominating committee or person appointed by the
board of directors or by any shareholder of the Corporation entitled to vote for
the election of directors at the meeting who complies with the notice procedures
set forth in this section 2.14. Such nominations, other than those made by or
at the direction of the board of directors, shall be made pursuant to timely
notice in writing to the Secretary of the corporation. To be timely, a
shareholder's notice shall be delivered to or mailed and received at the
principal executive offices of the corporation not less than 30 days nor more
than 60 days prior to the meeting; provided, however, that in the event that
less than 40 days' notice or prior public disclosure of the date of the meeting
is given or made to shareholders, notice by the shareholder to be timely must be
so received not later than the close of business on the 10th day following the
day on which such notice of the date of the meeting was mailed or such public
disclosure was made. Such shareholder's notice shall set forth (a) as to each
person whom the shareholder proposes to nominate for election or re-election as
a director, (i) the name, age, business address and residence address of the
person, (ii) the principal occupation or employment of the person, (iii) the
class and number of shares of the Corporation beneficially owned by the person,
and (iv) any other information relating to the person that is required to be
disclosed in solicitations for proxies for election of directors pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended; and (b) as
to the shareholder giving the notice, (i) the name and record address of the
shareholder, and (ii) the class and number of shares of the Corporation
beneficially owned by the shareholder. The Corporation may require any proposed
nominee to furnish such other information as may reasonably be required by the
Corporation to determine the eligibility of such proposed nominee to serve as a
director of the Corporation. No person shall be eligible for election as a
director of the Corporation unless nominated in accordance with the procedures
set forth herein. These provisions shall not apply to nomination of any persons
entitled to be separately elected by holders of preferred stock.
2.15 Inspectors. The board of directors may, in advance of any meeting of
----------
shareholders, appoint one or more inspectors to act at such meeting or any
adjournment thereof. If any of the inspectors so appointed shall fail to appear
or act, the chairman of the meeting shall, or if inspectors shall not have been
appointed, the chairman of the meeting may, appoint one or more inspectors.
Each inspector, before entering upon the discharge of his duties, shall take and
sign an oath faithfully to execute the duties of inspector at such meeting with
strict impartiality and according to the best of his ability. The inspectors
shall determine the number of shares of capital stock of the Corporation
outstanding and the voting power of each, the number of shares
<PAGE>
represented at the meeting, the existence of a quorum, and the validity and
effect of proxies and shall receive votes, ballots, or consents, hear and
determine all challenges and questions arising in connection with the right to
vote, count and tabulate all votes, ballots, or consents, determine the results,
and do such acts as are proper to conduct the election or vote with fairness to
all shareholders. On request of the chairman of the meeting, the inspectors
shall make a report in writing of any challenge, request, or matter determined
by them and shall execute a certificate of any fact found by them. No director
or candidate for the office of director shall act as an inspector of an election
of directors. Inspectors need not be shareholders.
3. Directors
---------
3.1 Powers. The powers of the Corporation shall be exercised by or under
------
authority of, and the business and affairs of the Corporation and all corporate
powers shall be managed under the direction of, the board of directors.
3.2 Number, Term of Office and Qualifications. The property and business
-----------------------------------------
of the corporation shall be managed and controlled by a Board of Directors
consisting of seven directors or such other number of directors as shall be
determined from time to time by the Board of Directors. The Board of Directors
shall be divided into three classes, to be known as Classes "A," "B" and "C,"
with the term of office of one class expiring each year. Class A shall consist
of two or three Directors, each to hold office for an initial term expiring on
the date of the 1996 annual meeting of shareholders; Class B shall consist of
two or three Directors, each to hold office for an initial term expiring on the
date of the 1997 annual meeting of shareholders; and Class C shall consist of
two or three Directors, each to hold office for an initial term expiring on the
date of the 1998 annual meeting of shareholders, or, in each case, until his
successor shall be elected and shall have qualified. Subject to the foregoing,
at each annual meeting of shareholders a single class of Directors shall be
elected to succeed the directors whose terms shall have expired, and to hold
office for a term expiring at the third succeeding annual meeting of
shareholders. In the event of an increase or decrease in the number of
Directors, any newly created or eliminated directorships shall be apportioned
among the classes so as to make all classes as nearly equal as possible;
provided, however, that no decrease in the number of Directors shall have the
effect of shortening the term of an incumbent Director. Any vacancy occurring
in the Board of Directors may be filled by the affirmative vote of 60% of the
remaining Directors. A Director elected to fill a vacancy shall be elected for
the unexpired term of his predecessor in office. Any directorship to be filled
by reason of an increase in the number of Directors shall be filled by election
at an annual meeting or at a special meeting of shareholders called for that
purpose. Directors need not be residents of the State of Texas or shareholders
of the Corporation.
3.3 Election. The directors shall be elected at the annual meetings of
--------
the shareholders, and each Director elected shall serve until his successor
shall have been elected and qualified.
3.4 Removal of Directors. At any meeting of shareholders called expressly
--------------------
for the purpose of removing a Director, any Director or the entire Board of
Directors may be removed,
<PAGE>
with or without cause, by a vote of the holders of a majority of the shares then
entitled to vote at an election of Directors.
4. Meetings of the Board of Directors
----------------------------------
4.1 Place. Meetings of the board of directors, regular or special, may be
-----
held either within or without the State of Texas.
4.2 Regular Meetings. Regular meetings of the board of directors shall be
----------------
held at such dates and times and at such places as shall from time to time be
determined by the board of directors. Regular meetings may be held with or
without notice, as determined by the board of directors.
4.3 Special Meetings. Special meetings of the board of directors may be
----------------
called by the chairman of the board of directors or the president and shall be
called by the secretary on the written request of any two directors. Notice of
each special meeting of the board of directors shall be given to each director
at least 48 hours before the meeting is scheduled to convene.
4.4 Notice and Waiver of Notice. Attendance of a director at any meeting
---------------------------
shall constitute a waiver of notice of such meeting, except where a director
attends for the express purpose of objecting to the transaction of any business
on the ground that the meeting is not lawfully called or convened. Except as
may be otherwise provided by law or by the Articles of Incorporation or by these
Bylaws, neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the board of directors need be specified in the
notice or waiver of notice of such meeting.
4.5 Quorum of Directors; Vote Required. At all meetings of the Board of
----------------------------------
Directors a majority of the Directors shall constitute a quorum for the
transaction of business and the act of a majority of the Directors present at
any meeting at which there is a quorum shall be the act of the Board of
Directors. If a quorum shall not be present at any meeting of Directors, the
Directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
4.6 Action Without Meetings. Any action required or permitted to be taken
-----------------------
at a meeting of the board of directors or any committee may be taken without a
meeting if a consent in writing, setting forth the action so taken, is signed by
all the members of the board of directors or committee, as the case may be.
4.7 Committees.
----------
(a) The board of directors, by resolution adopted by a majority of the full
board of directors, may designate from among its members one or more committees,
each of which shall be comprised of one or more of its members, and may
designate one or more of its members as alternate members of any committee, who
may, subject to any limitations imposed by the board of directors, replace
absent or disqualified members at any meeting of that committee. Any such
<PAGE>
committee, to the extent provided in such resolution shall have and may exercise
all of the authority of the board of directors, subject to the limitations set
forth below and in the Act.
(b) No committee of the board of directors shall have the authority of the
board of directors in reference to:
1. amending the Articles of Incorporation, except that a committee
may, to the extent provided in the resolution designating that committee or
in the Articles of Incorporation or the Bylaws, exercise the authority of
the board of directors vested in it in accordance with Article 2.13 of the
Act;
2. proposing a reduction of the stated capital of the Corporation in
the manner permitted by Article 4.12 of the Act;
3. approving a plan of merger or share exchange of the Corporation;
4. recommending to the shareholders the sale, lease, or exchange of
all or substantially all of the property and assets of the Corporation
otherwise than in the usual and regular course of its business;
5. recommending to the shareholders a voluntary dissolution of the
Corporation or a revocation thereof;
6. amending, altering, or repealing these Bylaws of the Corporation or
adopting new Bylaws of the Corporation;
7. filling vacancies in the board of directors;
8. filling vacancies in or designating alternate members of any such
committee;
9. filling any directorship to be filled by reason of an increase in
the number of directors;
10. electing or removing officers of the Corporation or members or
alternate members of any such committee;
11. fixing the compensation of any member or alternate members of such
committee; or
12. altering or repealing any resolution of the board of directors
that by its terms provides that it shall not be so amendable or repealable.
(c) Unless the resolution designating a particular committee, the Articles
of Incorporation, or these Bylaws expressly so provide, no committee of the
board of directors shall
<PAGE>
have the authority to authorize a distribution or to authorize the issuance of
shares of the Corporation.
(d) The designation of a committee of the board of directors and the
delegation thereto of authority shall not operate to relieve the board of
directors, or any member thereof, of any responsibility imposed by law.
4.8 Compensation. The Directors shall receive such compensation for their
------------
services as directors as may be determined by resolution of the board of
directors. Each Director shall be reimbursed for travel and other reasonable
out-of-pocket expenses incurred by such Director in attending regular and
special meetings of the board of directors or any committee. The receipt of
compensation or reimbursement of expenses shall not preclude any director from
serving the Corporation in any other capacity and receiving compensation
therefor.
5. Officers
--------
5.1 Election, Number, Qualification, Term, Compensation. The officers of
---------------------------------------------------
the Corporation shall be elected by the board of directors and shall consist of
a president, a vice-president, a secretary and a treasurer. The board of
directors may also elect a chairman of the board, additional vice-presidents,
one or more assistant secretaries and assistant treasurers and such other
officers and assistant officers and agents as it shall deem necessary, who shall
hold their offices for such terms and shall have such authority and exercise
such powers and perform such duties as shall be determined from time to time by
the board by resolution not inconsistent with these Bylaws. Two or more offices
may be held by the same person. None of the officers need be directors except
the president. The board of directors shall have the power to enter into
contracts for the employment and compensation of officers for such terms as the
board deems advisable. The salaries of all officers of the Corporation shall be
fixed by the board of directors.
5.2 Removal. The officers of the Corporation shall hold office until
-------
their successors are elected or appointed and qualify, or until their death or
until their resignation or removal from office. Any officer elected or
appointed by the board of directors may be removed at any time by the board,
with or without cause. Such removal shall be without prejudice to the contract
rights, if any, of the person so removed. Election or appointment of an officer
shall not of itself create contract rights.
5.3 Vacancies. Any vacancy occurring in any office of the Corporation by
---------
death, resignation, removal or otherwise shall be filled by the board of
directors.
5.4 Authority. Officers and agents shall have such authority and perform
---------
such duties in the management of the Corporation as may be provided in these
Bylaws.
5.5 Chairman of the Board. The Chairman of the Board, if one is elected,
---------------------
shall preside at all meetings of the board of directors and of the shareholders
and shall have such other powers and duties as may from time to time be
prescribed by the board of directors upon written directions given to him
pursuant to resolutions duly adopted by the board of directors.
<PAGE>
5.6 Vice-Chairman of the Board. The Vice-chairman of the Board, if
--------------------------
elected, shall preside at meetings of the board of directors and of shareholders
in the absence of the chairman of the board. The vice-chairman of the board
shall have such other powers and duties as from time to time may be prescribed
by the board of directors.
5.7 President. The president shall be the chief executive officer of the
---------
Corporation, shall have general and active management of the business and
affairs of the Corporation and shall see that all orders and resolutions of the
board of directors are carried into effect. He shall preside at all meetings of
the shareholders and of the board of directors, unless a chairman of the board
or vice-chairman of the board has been elected, in which event the president
shall preside at meetings of the shareholders and of the board of directors in
the absence or disability of the chairman of the board or vice-chairman of the
board.
5.8 Vice-President. Vice-presidents, including executive vice-presidents
--------------
and senior vice-presidents, in the order of their seniority, unless otherwise
determined by the board of directors, shall, in the absence or disability of the
president, perform the duties and have the authority and exercise the powers of
the president. They shall perform such other duties and have such other
authority and powers as the board of directors may from time to time prescribe
or as the president may from time to time delegate.
5.9 Secretary. The secretary shall attend all meetings of the board of
---------
directors and all meetings of shareholders and record all of the proceedings of
the meetings of the board of directors and of the shareholders in a minute book
to be kept for that purpose and shall perform like duties for the standing
committees when required. He shall give, or cause to be given, notice of all
meetings of the shareholders and special meetings of the board of directors, and
shall perform such other duties as may be prescribed by the board of directors
or president, under whose supervision he shall be. He shall keep in safe
custody the seal of the Corporation and, when authorized by the board of
directors, shall affix the same to any instrument requiring it and, when so
affixed, it shall be attested by his signature or by the signature of an
assistant secretary or of the treasurer.
5.10 Treasurer.
---------
(a) The treasurer shall have custody of the corporate funds and securities
and shall keep full and accurate accounts and records of receipts, disbursements
and other transactions in books belonging to the Corporation, and shall deposit
all moneys and other valuable effects in the name and to the credit of the
Corporation in such depositories as may be designated by the board of directors.
(b) The treasurer shall disburse the funds of the Corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the president or board of directors so requires,
an account of all his transactions as treasurer and of the financial condition
of the Corporation.
<PAGE>
(c) If required by the board of directors, the treasurer shall give the
Corporation a bond of such type, character and amount as the board of directors
may require.
5.11 Assistant Secretary and Assistant Treasurer. In the absence of the
-------------------------------------------
secretary or treasurer, an assistant secretary or assistant treasurer,
respectively shall perform the duties of the secretary or treasurer. Assistant
treasurers may be required to give bond as provided in section 5.9(c). The
assistant secretaries and assistant treasurers, in general shall have such
powers and perform such duties as the treasurer or secretary, respectively, or
the board of directors or president may prescribe.
6. Certificates Representing Shares
--------------------------------
6.1 Certificates. The shares of the Corporation shall be represented by
------------
certificates signed by the president or a vice-president and the secretary or an
assistant secretary of the Corporation, and may be sealed with the seal of the
Corporation or a facsimile thereof. The signatures of the president or vice-
president and the secretary or assistant secretary upon a certificate may be
facsimiles if the certificate is countersigned by a transfer agent, or
registered by a registrar, other than the Corporation itself or an employee of
the Corporation. The certificates shall be consecutively numbered and shall be
entered in the books of the Corporation as they are issued. Each certificate
shall state on the face thereof the holder's name, the number and class of
shares, and the par value of such shares or a statement that such shares are
without par value.
6.2 Payment, Issuance. Shares may be issued for such consideration, not
-----------------
less than the par value thereof, as may be fixed from time to time by the board
of directors. The consideration for the payment of shares shall consist of
money paid, labor done or property actually received. Shares may not be issued
until the full amount of the consideration fixed therefor has been paid.
6.3 Lost, Stolen or Destroyed Certificates. The board of directors may
--------------------------------------
direct a new certificate to be issued in place of any certificate theretofore
issued by the Corporation alleged to have been lost, stolen or destroyed upon
the making of an affidavit of that fact by the person claiming the certificate
to be lost, stolen or destroyed. When authorizing such issue of a new
certificate, the board of directors may, in its discretion and as a condition
precedent to the issuance thereof, prescribe such terms and conditions as it
deems expedient and may require such indemnities as it deems adequate to protect
the Corporation from any claim that may be made against it with respect to any
such certificate alleged to have been lost or destroyed.
6.4 Registration of Transfer. Shares of stock shall be transferable only
------------------------
on the books of the Corporation by the holder thereof in person or by his duly
authorized attorney. Upon surrender to the Corporation or the transfer agent of
the Corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, a new
certificate shall be issued to the person entitled thereto and the old
certificate cancelled and the transaction recorded upon the books of the
Corporation.
<PAGE>
6.5 Registered Owner. The Corporation shall be entitled to recognize the
----------------
exclusive right of a person registered on its books as of the record date as the
owner of shares to receive dividends or other distributions, and to vote as such
owner, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
the laws of the State of Texas. The person in whose name the shares are or were
registered in the stock transfer books of the Corporation as of the record date
shall be deemed to be the owner of the shares registered in his name at that
time. Neither the Corporation nor any of its officers, directors, or agents
shall be under any liability for making such a distribution to a person in whose
name shares were registered in the stock transfer books as of the record date or
to the heirs, successors, or assigns of the person, even though the person, or
his heirs, successors, or assigns, may not possess a certificate for shares.
7. Dividends
---------
7.1 Declaration and Payment. Subject to the Act and the Articles of
-----------------------
Incorporation, dividends may be declared by the board of directors, in its
discretion, at any regular or special meeting, pursuant to law and may be paid
in cash, in property or in the Corporation's own shares.
7.2 Reserves. Before payment of any dividend, the board of directors, by
--------
resolution, may create a reserve or reserves out of the Corporation's surplus or
designate or allocate any part or all of such surplus in any manner for any
proper purpose or purposes, and may increase, create, or abolish any such
reserve, designation, or allocation in the same manner.
8. General Provisions
------------------
8.1 Fiscal Year. The fiscal year of the Corporation shall be fixed by
-----------
resolution of the board of directors.
8.2 Seal. The corporate seal shall be in such form as may be prescribed
----
by the board of directors. The seal may be used by causing it or a facsimile
thereof to be impressed or affixed or in any manner reproduced.
8.3 Minutes. The Corporation shall keep correct and complete books and
-------
records of account and shall keep minutes of the proceedings of its shareholders
and board of directors, and shall keep at its registered office or principal
place of business, or at the office of its transfer agent or registrar, a record
of its shareholders, giving names and addresses of all shareholders and the
number and class of the shares held by each.
8.4 Amendment. The power to amend or repeal these Bylaws and adopt new
---------
Bylaws shall be reserved exclusively to the Board of Directors. These Bylaws
may be altered, amended or repealed and new Bylaws may be adopted by the Board
of Directors, at any meeting of the
<PAGE>
Board of Directors at which a quorum is present, provided notice of the proposed
alteration, amendment, or repeal is contained in the notice of the meeting.
8.5 Notice. Any notice to directors or shareholders shall be in writing
------
and shall be delivered personally or mailed to the directors or shareholders at
their respective addresses appearing on the books of the Corporation. Notice by
mail shall be deemed to be given at the time when the same shall be deposited in
the United States mail, postage prepaid. Notice to directors may also be given
by facsimile transmittal. Whenever any notice is required to be given under the
provisions of applicable statutes or of the Articles of Incorporation or of
these Bylaws, a waiver thereof in writing signed by the person or persons
entitled to such notice, whether before or after the time stated therein, shall
be deemed equivalent to the giving of such notice.
Dated: May 3, 1996 _______________________________________
Michael B. Perrine, Secretary
<PAGE>
EXHIBIT 10.1(a)
1 . Definitions As used in this Agreement:
-----------
(a) The term "Stock" shall mean all issued and outstanding shares
of common stock of the Corporation, together with all shares of capital stock of
the Corporation of any class which may hereafter be issued. Moreover, all
references herein to Stock owned by a Shareholder includes the community
interest, if any, of the spouse of such Shareholder in such Stock.
(b) The term "Disposition" shall mean any transfer (whether by
gift, will, intestacy, sale, partition or otherwise), pledge, mortgage or other
encumbrance, or any other disposition of Stock whatsoever, whether voluntary or
involuntary (provided that Stock pledged and/or mortgaged to the Corporation
shall not be deemed to be a Disposition of said Stock). Notwithstanding the
aforementioned, Stock transferred to members of the Siddons family or trusts
established for the benefit of members of the Siddons family in settlement of
the estate of R.F. Siddons, Jr. (the "Estate") and/or Stock transferred to R.C.
Siddons from members of the Siddons family subsequent to settlement of the
Estate shall not be deemed to be a Disposition of the Stock pursuant to this
Agreement.
(c) The term "Mandatory Disposition Event" shall mean any of the
following: (i) the conviction of Shareholder of a felony; (ii) theft by
Shareholder from the Travis Group; or (iii) Shareholder's entering into
competition with the Travis Group either directly or by virtue of ownership of
an equity interest of more than two (2%) percent in any venture, partnership or
corporation which competes with the Travis Group.
2. Offer to the Shareholders. Except as herein provided, no Shareholder
-------------------------
shall make any Disposition of any Stock without the written consent of the other
Shareholders and the Corporation, or in the absence of such written consent,
except pursuant to the provisions set forth in this Agreement.
(a) Any Shareholder or legal representative of Shareholder desiring
or required to make a Disposition of Stock ("Offeror" or "Selling Party") shall
first make an offer (the "Offer") to sell such Stock to the other Shareholders
(the "Offeree" or "Purchasing Party").
<PAGE>
STOCK TRANSFER RESTRICTION AND VOTING AGREEMENT
This Stock Transfer Restriction and Voting Agreement (the "Agreement") is
executed as of January 1, 1992, by and between Travis Boats & Motors, Inc., a
----- ---------
Texas Corporation (the "Corporation") and E.D. Bohls, James C. Bohls, Jesse Cox,
R.C. Siddons, Joe Simpson, Ron Spradling and Mark T. Walton (individually the
"Shareholder" and collectively the "Shareholders"); and the respective spouses
of the Shareholders.
WITNESSETH
----------
Whereas, the Corporation is incorporated under the laws of the state of Texas
with an authorized capitalization of fifty million (50,000,000) shares of common
stock, ten cents ($0.10) par value, of which six hundred (600) shares are Issued
and outstanding; and
Whereas, the Shareholders are the owners of all such issued and outstanding
shares of common stock of the Corporation as follows:
<TABLE>
<CAPTION>
NAME NUMBER OF SHARES
- ------------ ----------------
<S> <C>
E.D. Bohls 142.105
James C. Bohls 47.369
Jesse Cox 47.369
R.C. Siddons 126.316
Joe Simpson 94.736
Ron Spradling 47.369
Mark T. Walton 94.736; and
</TABLE>
Whereas, the Corporation and the Shareholders desire to promote their mutual
interests and the interests of the Corporation by imposing certain restrictions
and obligations on themselves and the shares of stock of the Corporation;
Whereas, the Shareholders individually or collectively may from time to time be
employees of the Corporation or its affiliated and/or subsidiary companies
(collectively the "Travis Group");
Now, therefore, in consideration of the mutual promises contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, it is hereby agreed as follows:
<PAGE>
(b) The offer shall be sent to the other Shareholders and
shall state the number of shares involved; the names of, and the price to be
paid by any proposed purchasers; along with the terms and closing date of the
proposed Disposition (collectively the "terms and conditions" of the offer).
The date of the offer shall be the later of the date on which a notice
containing the offer has been so sent to all parties entitled to receive it or
the date upon which all the other Shareholders learn of such desired Disposition
or the Mandatory Disposition Event. The offer may be withdrawn prior to the
exercise of any of the options granted in Paragraph 2(c).
(c) The other Shareholders shall have the option, for thirty
(30) days following the offer, to elect to purchase not less than all the Stock,
subject to terms and conditions identical to (but no more favorable than) those
set forth in the offer, in such proportions as they mutually agree; provided,
however, that each Shareholder electing to purchase such Stock shall have the
right to purchase, at a minimum, that proportion of the number of shares of
Stock subject to the offer which the number of shares of Stock owned by such
Shareholder bears to the total number of shares of Stock owned by all
Shareholders electing to purchase. if the other Shareholders do not elect to
purchase all the Stock subject to an Offer, the Corporation shall have the
option for sixty (60) days following the offer, to elect to purchase not less
than all the Stock subject to terms and conditions identical to (but no more
favorable than) those set forth in the offer.
(d) All options to purchase Stock hereunder may be exercised by
the Purchasing Party giving the Offeror written notice of intent to purchase
such Stock in accordance with the notice provisions of Paragraph 12 of this
Agreement.
(e) If, at the time that any Shareholder exercises options
granted hereunder to purchase the Stock of the Offeror, there exist any
personal guarantees by the Offeror covering the indebtedness of the
Corporation, then the Shareholder exercising such option shall, as a condition
to the exercise of the option, if not presently in place, execute such personal
guarantees to cover the indebtedness of the Corporation in such amounts and to
such creditors as are presently outstanding from Offeror to such creditors to
cover the indebtedness of the Corporation.
(f) The closing shall be the later of the date set forth for
closing in the Offer or within thirty (3O) days of the date of the election to
purchase the Stock.
(g) If the other Shareholders or Corporation do not elect to
purchase all the Stock subject to an Offer, the Offeror shall be permitted, at
any time or times within sixty (60) days after the lapse of all options arising
in connection with such Offer, to dispose of all the Stock that was subject to
such Offer; Provided, however, that no such Disposition shall be made at a lower
price (if the Disposition involves a sale) nor on different terms nor to any
person other than specified in such Offer; and further provided that the other
party to the Disposition shall agree to be bound by the terms of this Agreement
and shall execute all documents reasonably requested by the Corporation to
evidence such agreement. If, after the lapse of such sixty (60) day period, no
such Disposition has been made, the Offeror must make a new Offer prior to
making any Disposition of such Stock.
<PAGE>
3. Sale of Stock upon Death of Shareholder
---------------------------------------
(a) Upon ???? death of a Shareholder, ???? personal
representative of the deceased Shareholder shall promptly notify the Corporation
and the remaining Shareholders of the deceased Shareholder's death. Once such
notice has been received by all such parties (the "Obligation Date"), the
Corporation shall be obligated to purchase all of the deceased Shareholder's
Stock, and such deceased Shareholder's surviving spouse, if any, and executor or
administrator shall be obligated to sell such Stock to the Corporation. The
price per share at which such Stock shall be purchased shall be an amount equal
to the purchase price determined as provided in Paragraphs 8(a-d), (the date of
the offer thereunder being the Obligation Date). Such purchase shall be
consummated within six (6) months from the Obligation Date, but shall otherwise
be made in accordance with Paragraphs 8(e) and 8(f) of this Agreement.
(b) To provide a fund with which to purchase Stock upon the
death of a Shareholder, the Corporation may, at its option, apply for insurance
on the lives of any or all of the Shareholders. The Corporation shall pay all
premiums on such insurance policies and shall upon request of the Shareholders
give proof of payment to the Shareholders within twenty (20) days after the due
date of each premium. if any premium on any such policy shall not be paid within
twenty (20) days after its due date, the person insured under such policy shall
have the right to pay such premium and be reimbursed by the Corporation. The
Corporation or a trust established by the Corporation for such purpose (the
"Policy Owner") shall be the sole owner and beneficiary of all of such policies,
but during the term of this Agreement the Policy Owner shall not exercise any
rights under the policies or modify or impair any of the values of such policies
without the written consent of all Shareholders covered by such policies. Each
such policy may be purchased by the Shareholder covered by such policy (provided
that the Shareholder is the sole insured on the policy) at his option ("Policy
Purchase Option") upon the occurrence of either of the following events: (i) the
termination of such Shareholder's ownership of all his Stock for any reason
other than the death of such Shareholder or (ii) the termination of this
Agreement. The Policy Purchase Option shall be exercised by payment to the
Policy Owner within ninety (90) days from the date of the event giving rise to
the Policy Purchase option (the "Date") of an amount equal to the cash surrender
value of such policy as of the Date, minus the amount of any indebtedness
outstanding against such policy, plus an amount equal to the portion of any
premium paid which covers the period beginning with the Date. The policies
covered by and subject to this Agreement shall be listed in the Insurance
Schedule attached hereto as Exhibit B and made a part hereof. Unless the
---------
Policy Purchase Option has been exercised, upon the death of any Shareholder
insured by any such policy, the Policy Owner shall collect all proceeds of such
policy subject to Paragraph 8(e) hereof.
(c) If the Corporation shall not have sufficient surplus to permit
it lawfully to purchase all the Stock of the deceased Shareholder upon the
expiration of the six (6) month period set forth in Paragraph 3(a) the
obligation of the Corporation to buy and the obligation of the deceased
Shareholder's executor or administrator and the deceased Shareholder's spouse
to sell those shares that the Corporation cannot lawfully buy shall continue
until such time as the Corporation may discharge such obligation and, in
addition, Paragraph 2(c) shall apply to all such shares, the date of the
effectiveness of the option of the surviving Shareholders thereunder being the
date upon which such six (6) month period set forth in Paragraph 3(a) expires.
The price at which such Stock may be purchased under such option shall be the
same as the price to be paid by the Corporation under Paragraph 3(a)
above and shall be payable in accordance with Paragraphs 8(e) and 8(f),
provided that the closing shall take place thirty (30) days from the date
<PAGE>
the option is exercised. In the event such option is fully exercised in
accordance with Paragraph 2(c), the aforementioned continuing obligations to
buy or sell shall be discharged.
4.Disposition upon Termination of Marital Relationship.
-----------------------------------------------------
(a) If the marital relationship of a Shareholder is terminated by
the death of such Shareholder's spouse or by divorce and (i) such Shareholder
does not succeed to his or her spouse's community interest, if any, in the
Shareholder's Stock, or (ii) if any Stock owned by the Shareholder devolves to
his or her spouse as a result of divorce, then such Shareholder shall promptly
notify the remaining Shareholders of that fact, stating the date of such death
or divorce. Such Shareholder shall then have the option to purchase all of his
or her spouse's interest in the Stock, and the spouse or the executor or
administrator of the spouse's estate shall be obligated to sell such interest.
Such option must be exercised in accordance with Paragraph 2(d) within ninety
(90) days after such death or divorce. The price at which such interest shall
be purchased shall be an amount equal to the purchase price per share
determined as provided in Paragraphs 8(a-d) (the date of the offer thereunder
being the date of such death or divorce), provided that if the interest subject
to such option is an undivided interest in shares, the purchase price per share
shall be multiplied by the fraction that represents such undivided interest.
The purchase price shall be payable as provided in Paragraphs 8(e-f) (provided
that the closing shall be held within thirty (30) days from the date such
Shareholder exercises such option). Should such Shareholder fail to exercise
such option and deliver notice of such exercise to the remaining Shareholders
within such ninety (90) day period, such failure shall constitute an offer, and
the provisions of Paragraphs 2(c-f) shall apply to such interest, the date of
the offer thereunder being the ninety-first day after such death or divorce.
The price at which such Stock may be purchased and the terms of payment shall
be as set forth in Paragraphs 8(a-f) provided that the purchase price per share
determined as provided in Paragraphs 8(a-d) shall be adjusted, if necessary, as
set forth above. It is expressly agreed, however, that this Paragraph 4 shall
apply only to Stock transferred to a spouse as a result of or in settlement of
such spouse's community property interest in Stock that was originally held of
record by the Shareholder, and shall not be construed so as to authorize the
purchase of any Stock of which such spouse is the record owner.
(b) Any Stock or interest in Stock held by a Shareholder as a
trustee of a trust as a result of the death or divorce of the spouse of such
Shareholder shall be treated as owned by such Shareholder for purposes of this
Agreement, and any obligation of a Shareholder to sell or offer to sell Stock
includes any Stock or interest in Stock held by him or her as trustee of such
trust. If such Shareholder ceases to act as
<PAGE>
trustee of such trust for any reason, such Shareholder shall promptly notify the
remaining Shareholders of that fact, stating the date such shareholder ceased to
act as trustee. Such Shareholder shall then have the option to purchase all the
Stock (or interest in the Stock) held in such trust. Such option must be
exercised in accordance with Paragraph 2(d) within ninety (90) days after such
Shareholder ceases to act as trustee of such trust. The price at which such
Stock or interest shall be purchased shall be an amount equal to the purchase
price per share determined as provided in Paragraphs 8(a-d) (the date of the
Offer thereunder being the date such Shareholder ceases to act as trustee of
such trust) provided that if an interest subject to such option is an undivided
interest in shares, the purchase price per share shall be multiplied by the
fraction that represents such undivided interest. The purchase price shall be
payable as provided in Paragraphs 8(e-f) (provided that the closing shall be
held within thirty (30) days from the date such Shareholder exercises such
option). Should such Shareholder fail to exercise such option and to deliver
notice of such exercise to the remaining Shareholders within such ninety (90)
day period, such failure shall constitute an Offer, and the provisions of
Paragraphs 2(c-f) and Paragraphs 8(a-f) shall apply to such Stock or interest,
the date of the Offer thereunder being the ninety first day after such
Shareholder ceases to act as trustee of such trust, provided that the purchase
price per share determined as provided in Paragraphs 8(a-d) shall be adjusted,
if necessary, as set forth above.
5. Mandatory Disposition Event.
----------------------------
(a) Upon any Mandatory Disposition Event of Shareholder, then the
other Shareholders and the Corporation shall have the options as set forth in
Paragraphs 2(c-f) to elect to purchase the Stock of the Shareholder suffering
said Mandatory Disposition Event. The price at which such Stock may be purchased
under such option and the terms of payment shall be as set forth in Paragraphs
8(a-f). The date of the Offer shall be the later of (i) the date of the
Mandatory Disposition Event or (ii) the date all the other Shareholders learn
of such Mandatory Disposition Event.
6. Involuntary Disposition.
------------------------
(a) Prior to or upon any Involuntary Disposition of Stock not
specifically covered by another Section of this Agreement, the Shareholder who
owns such Stock or the representative or successor in interest of such
Shareholder shall send written notice thereof to the other Shareholders
disclosing in full the nature and details of such Involuntary Disposition. Such
notice shall constitute an Offer, and the provisions of Paragraphs 2(c-f) and
Paragraphs 8(a-f) shall apply, provided that the period of the option conferred
by Paragraph 2(c) shall be two (2) years for the Shareholders and three (3)
years for the Corporation. The date of the Offer shall be the later of (i) the
date of such Involuntary Disposition or (ii) the date upon which all the other
Shareholders learn of such Involuntary Disposition, whether by virtue of receipt
of the above referenced notice or otherwise.
7. Event of Sale of Corporation.
-----------------------------
(a) If the Shareholders of the Corporation receive a bona fide
third party offer to purchase all of the issued and outstanding Stock, and if
Shareholders holding fifty-one percent (51%) or more of the issued and
outstanding Stock of the Corporation agree to accept such offer (the "Consenting
Shareholder") and Shareholder declines such offer (the "Dissenting
Shareholder"), the Dissenting Shareholder shall have the option for a period of
sixty (60) days from the date of such bona fide third party offer to elect to
purchase the Stock of the Consenting Shareholder subject to the terms and
conditions as set forth in Paragraphs 2(c-f). In the event that the Dissenting
Shareholder does not exercise the option set forth herein to purchase such
Stock, said inaction shall be deemed acceptance of such third party bona fide
offer for the purposes of this Agreement.
<PAGE>
8. Purchase of Stock Pursuant to Paragraphs 3,4,5 or 6 Herein.
----------------------------------------------------------
(a) Unless otherwise agreed, the price per share to be paid upon
any purchase of Stock pursuant to Paragraphs 3,4,5 or 6 herein shall be the
price of the Stock as of the date of the offer determined as follows: At every
annual meeting of Shareholders (or other mutually agreed time), the
Shareholders shall agree upon the value of one (1) share of Stock for purposes
of this Agreement. Such value shall be computed as of December 31 of the
previous fiscal year or as of such other time as may be mutually agreed upon
and shall be calculated as ( 3 X A)+B, where "A" equals the average net
income after taxes of the Corporation for the fiscal year then ended and the
four (4) fiscal years prior thereto and where "B" equals the excess (or
deficit) of the net book value of the total assets less total liabilities of
the Corporation, with said determination of total assets and total liabilities
(said liabilities to include any outstanding issue(s) of preferred stock
containing a mandatory redemption clause) being made in accordance with
Generally Accepted Accounting Principles (except to the extent of the
adjustments set forth herein). Such value shall be stipulated on the Valuation
Schedule attached hereto as Exhibit A and made a part hereof. Failure of the
---------
Shareholders to stipulate the value of the Stock at any time when such
stipulation is provided for herein shall not affect the validity or
enforceability of this Agreement, rather the value of the Stock shall be
determined in accordance with Paragraph 8(d) below.
(b) Notwithstanding the aforementioned, at the request of either
the Selling Party or the Purchasing Party the value of the Stock may be computed
as of December 31 of the current fiscal year in the event that the date of the
offer is June 1 of said fiscal year or thereafter. In such instance,
notwithstanding anything herein to the contrary, the closing shall be on or
prior to March 31 of the immediately succeeding calendar year.
(c) At each December meeting of the Board of Directors of the
Corporation, or as of such other time as may be mutually agreed upon, the
directors (by majority vote of a quorum of Directors) shall determine the market
value of all land and buildings owned by the Corporation. Said value shall be
used in lieu of the net book value of such land and buildings for the succeeding
twelve (12) calender month period in determining the net book value of the
Corporation as set forth in Paragraph 8(a) above. In the event that the
Directors shall fail to determine the market value of all land and buildings
owned by the Corporation, the value shall remain the net book value as reflected
on the balance sheet of the Corporation.
(d) In the event that eighteen (18) months or more shall have
elapsed from the date of this Agreement and no resolution fixing and determining
the value of the Stock shall have been adopted in accordance with Paragraph
8(a) hereof during the eighteen (18) month period preceding the Offer, the
calculation of such value shall be determined by an appraisal committee (the
"Appraisal Committee"). The Appraisal Committee shall be composed of two
independent disinterested and qualified commercial appraisers, one of whom shall
be appointed by the Selling Party and the other whom shall be appointed by the
Purchasing Party. The appointment of the Appraisal Committee shall be within
ten (10) days of the Obligation Date or within ten (10) days of the election by
the Purchasing Party to accept the Offer.
<PAGE>
If the Selling Party fails or refuses to name an appraiser within the time
required, the Purchasing Party may name two appraisers. Likewise, if the
Purchasing Party fails or refuses to name an appraiser within the time required
the Selling Party may name two appraisers. The two appraisers so appointed shall
constitute the Appraisal Committee and shall determine the value of the Stock to
be purchased within thirty days (30) days after their appointment. If the
Appraisal Committee cannot agree on a value, then they shall appoint a third
appraiser who shall determine the value of the Stock to be purchased within
thirty (30) days after his appointment. Expenses of the Appraisal Committee
shall be paid one-half by the Purchasing Party and one-half by the Selling
Party. In the event of the use of an Appraisal Committee, the closing shall be
within thirty (30) days of the date a value of the Stock is determined by such
Appraisal Committee.
(e) In the event of a purchase of Stock pursuant to Paragraphs 3, 4., 5 or
6 herein, the greater of (i) ten percent (10%) of the purchase price determined
under Paragraphs 8(a-d) of the Stock being acquired by each Purchasing Party or
(ii) the proceeds, if any, of life insurance (purchased pursuant to Paragraph
3(b) herein) up to the purchase price determined under Paragraphs 8(a-d) of the
Stock being acquired by each Purchasing Party shall be paid in cash or by
certified or cashier's check upon the closing, and any balance shall be
evidenced at such time by the negotiable promissory note of such purchaser,
payable in sixty (60) or fewer equal monthly installments beginning thirty (30)
days from the date of the closing, bearing interest at the rate set forth below
in Paragraph 8(f), without prepayment penalty and secured by the Stock
purchased. All checks and notes payable under this paragraph shall be actually-
delivered or sent by certified or registered mail, return receipt requested,
properly stamped and addressed. In the latter case, delivery shall be deemed to
have been made upon the deposit of such documents in the mail.
(f) The interest rate applicable to all promissory notes delivered
pursuant to Paragraph 8(e) shall be fixed at each December meeting of the Board
of Directors of the Corporation, or as of such other time as may be mutually
agreed upon, by a majority vote of a quorum of Directors. In the event that the
Directors shall fail to fix an interest rate, the rate shall be the lesser of
(i) the Prime Rate as published in the Wall Street Journal Money Rate Section as
of the date of the promissory note, (ii) nine percent (9%) per annum, or (iii)
the maximum allowable rate. Such interest rate shall be stipulated on the
Valuation Schedule attached hereto as Exhibit A and made a part hereof.
---------
Notwithstanding anything herein, or in any note delivered pursuant to this
Agreement, to the contrary, it is agreed that in no event shall the interest
rate under this Paragraph 8(f) exceed the maximum amount of interest permitted
by law, and in the event any excess interest beyond such maximum amount is
agreed to or paid, such excess shall be deemed a mistake and, if paid, shall be
either refunded to the payor or credited to the principal amount of the
promissory note, at the option of the maker of the note.
<PAGE>
9. (Intentionally Omitted)
10. (Intentionally Omitted)
11. Endorsement of Stock Certificates. All certificates of Stock of
---------------------------------
the Corporation now owned or that may hereafter be acquired by the Shareholders
shall be endorsed on the back thereof as follows:
BY AGREEMENT AMONG THE CORPORATION AND ITS SHAREHOLDERS, RESTRICTIONS HAVE
BEEN PLACED UPON THE TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE AND
UPON THE VOTING RIGHTS APPURTENANT THERETO. A COPY OF THE AGREEMENT, WHICH
CONTAINS A FULL STATEMENT OF THE RESTRICTIONS, WILL BE FURNISHED WITHOUT CHARGE
UPON WRITTEN REQUEST TO THE CORPORATION AT ITS PRINCIPAL PLACE OF BUSINESS OR
REGISTERED OFFICE.
Such certificates shall be endorsed on the front thereof as follows:
SEE RESTRICTIONS ON REVERSE SIDE.
12. Notices. All Offers, exercises, notices, requests, designations,
-------
approvals, consents or decisions required or permitted to be sent hereunder to
the Corporation or to any Shareholder or spouse of a Shareholder must be in
writing and either hand delivered or mailed by registered or certified mail,
return receipt requested, properly stamped and addressed to the party entitled
to receive such notice or other document at P. 0. Box 9097, Austin, Texas 78766,
or at such other address as such party shall request in a written notice, sent
to the Corporation and to all Shareholders. Except as specifically provided
herein, such notice shall be deemed effective as of the date of delivery (if
hand delivered) or the date of mailing (if mailed by registered or certified
mail in the manner set forth above).
13. Miscellaneous Provisions.
------------------------
(a) This Agreement shall be subject to and governed by the laws of
the State of Texas.
(b) Whenever the context requires, the gender of all words used
herein shall include the masculine, feminine and neuter, and the number of all
words shall include the singular and plural. Titles of Paragraphs are for
convenience only and neither limit nor amplify any of the provisions contained
herein.
(c) This Agreement shall be binding upon the Corporation, the
Shareholders, the spouses of the Shareholders and their heirs, executors,
administrators, successors and assigns.
(d) This Agreement may be amended from time to time by an instrument
in writing signed by all those who are parties to this Agreement at the time of
such amendment.
(e) Upon execution of this Agreement, the rights, duties and
obligations of the Shareholders with respect to the matters set forth herein
shall be governed solely by the provisions of this Agreement, and all
representations, warranties, terms and conditions with respect to such matters
which may be contained in any prior writing executed by the Shareholders (or by
any of them), including, but not limited to, that certain Stock Transfer
Restriction Agreement dated February 17, 1983 between the Corporation and Mark
T. Walton shall be null and void and of no further force and effect.
<PAGE>
(f) This Agreement shall terminate automatically upon the bankruptcy
or dissolution of the Corporation, upon the occurrence of any event which
reduces the number of Shareholders to one (except as specifically provided
herein) or upon the deaths of all the Shareholders within a period of sixty (60)
days. In the last event, the ownership of the Stock of the Corporation which
existed immediately prior to the death of the first Shareholder in such sixty
(60) day period shall not be altered by this Agreement. This Agreement may also
be terminated by an instrument in writing signed by all those who are parties to
this Agreement at the time of the signing of such instrument.
(g) Upon the disposition of a Shareholder's Stock, such Shareholder
shall cease to be a party to this Agreement and shall have no further rights
hereunder except as may be specifically provided herein.
(h) The spouses of the Shareholders, if any, are fully aware of,
understand, and fully consent and agree to, the provisions of this Agreement and
its binding effect upon any community property interests they may now or
hereafter own, and agree that the termination of their marital relationship with
any Shareholder for any reason shall not have the effect of removing any Stock
of the Corporation otherwise subject to this Agreement from the coverage hereof,
and that their awareness, understanding, consent and agreement are evidenced by
their signing this Agreement. Further, such spouses agree that in the case of
any Stock that is the community property of such spouse and a Shareholder, all
rights of management, control and disposition (within the meaning of the Texas
Family Code) of such community property shall be exercisable solely by such
Shareholder, unless such Shareholder is under a disability.
(i) Any attempted Disposition in breach of this Agreement shall be
void and of no effect, and shall constitute an Offer, and the provisions of
Paragraphs 2(c-g) shall apply thereto; provided that the date of the Offer for
purposes of this paragraph shall be deemed to be the date as of which the
Corporation has actual knowledge of such attempted Disposition. Each party
hereto acknowledges that a remedy at law for any breach or attempted breach of
this Agreement will be inadequate, agrees that each other party hereto shall be
entitled to specific performance and injunctive and other equitable relief in
case of any such breach or attempted breach, and further agrees to waive any
requirement for the securing or posting of any bond in connection with the
obtaining of any such injunctive or other equitable relief.
(j) The Corporation hereby agrees not to issue or sell shares of
Stock to any person who is not already a party hereto unless such person and
such person's spouse agree to become parties to this Agreement contemporaneously
with the issuance of the shares and agree to become parties to this Agreement by
the execution of an Addendum Agreement in the form attached hereto as Exhibit C,
---------
which Addendum Agreement shall bind them to, and grant them the benefits of,
this Agreement as though they were original parties hereto. The Corporation and
the Shareholders further agree that if a party hereto marries after obtaining
shares of Stock, the Corporation and the Shareholders shall not issue or sell
additional shares of or interests in or rights to acquire Stock to such
Shareholder unless such Shareholder's spouse agrees to become a party to this
Agreement contemporaneously with the issuance of the additional shares by
executing an Addendum Agreement as provided in the preceding sentence. For these
purposes, all the Shareholders (and their respective spouses, if any) hereby
appoint the Corporation as their agent and attorney to execute such Addendum
Agreement on their behalf and expressly bind themselves to the Addendum
Agreement by the Corporation's execution of that Agreement without further
action on their part.
<PAGE>
(k) Pursuant ???? ???? 2.22 and ???? ???? ???? the ???? Business
Corporation Act, amended (the "TBCA"), a interpart of this Agreement shall be
deposited with the corporation at principal place of business and its
registered office and shall be subject to the same right of examination by a
Shareholder of the Corporation, in person or by agent, attorney or accountant,
as are the books and records of the Corporation.
(1) If any provision(s) of this Agreement, or the application thereof
to any party hereto or under any circumstances, shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provision to other persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law.
(m) This Agreement constitutes a "Voting Agreement" in accordance
with the provisions of article 2.30B of the TBCA.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
multiple counterparts, each of which shall be deemed an original, on the date
and year first above written.
SPOUSES SHAREHOLDERS
/s/ Mary E. Bohls /s/ E.D. Bohls
- ---------------------------- ------------------------
E.D. Bohls
/s/ Dawn S. Bohls /s/ James C. Bohls
- ---------------------------- ------------------------
James Bohls
/s/ Margaret M. Cox /s/ Jesse Cox
- ---------------------------- ------------------------
Jesse Cox
/s/ Bonnie B. Siddons /s/ R.C. Siddons
- ---------------------------- ------------------------
R.C. Siddons
/s/ Patricia J. Simpson /s/ Joe Simpson
- ---------------------------- ------------------------
Joe Simpson
/s/ Ron Spradling
____________________________ ------------------------
Ron Spradling
/s/ Debbie L. Walton /s/ Mark T. Walton
- ---------------------------- ------------------------
Mark T. Walton
CORPORATION
TRAVIS BOATS & MOTORS, INC.
BY: /s/ Mark T. Walton Mark T. Walton, President
-------------------------
<PAGE>
EXHIBIT A
TO STOCK TRANSFER RESTRICTION AND VOTING AGREEMENT
VALUATION SCHEDULE
------------------
<TABLE>
<CAPTION>
LAND/BUILDING NUMBER OF VALUE
DATE ADJUSTMENT SHARES OUTSTDG PER SHARE INTEREST RATE
---- ---------- -------------- --------- -------------
<S> <C> <C> <C> <C>
PRIME + 1%
$ 0 600 $ FIXED ANNUALLY %
- -------- ------------ -------------- --------- --------------
</TABLE>
SHAREHOLDERS
- ------------
E.D. Bohls /s/ E.D. Bohls
---------------------
James Bohls /s/ James C. Bohls
---------------------
Jesse Cox /s/ Jesse Cox
---------------------
R.C. Siddons _____________________
Joe Simpson /s/ Joe Simpson
---------------------
Ron Spradling _____________________
Mark T. Walton /s/ Mark T. Walton
---------------------
CORPORATION
- -----------
TRAVIS BOATS & MOTORS, INC.
By: /s/ Mark T. Walton, President
-----------------------------
Mark T. Walton, President
<PAGE>
EXHIBIT B
TO STOCK TRANSFER RESTRICTION AND VOTING AGREEMENT
INSURANCE SCHEDULE
--------- --------
<TABLE>
<CAPTION>
INSURANCE POLICY POLICY POLICY POLICY
SHAREHOLDER COMPANY TYPE NUMBER DATE AMOUNT
----------- --------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
E.D. Bohls SOUTHWESTERN WHOLE 1000010202 6/28/92 $300,000
LIFE LIFE
James Bohls SECURITY TERM 1013101R 7/27/92 $250,000
CONNECTICUT LIFE
Jesse Cox _______________________________________________________________
R.C. Siddons SECURITY TERM 101310OX 7/27/92 $600,000
CONNECTICUT LIFE
Joe Simpson JACKSON TERM 0019879780 8/l/92 $300,000
NATIONAL LIFE
Ron Spradling CROWN TERM 2,482,808 11/9/88 $100,000
LIFE LIFE
Mark T. Walton SECURITY TERM 1013099R 7/27/92 $1,000,000
CONNECTICUT LIFE
</TABLE>
CORPORATION
- -----------
TRAVIS BOATS & MOTORS, INC.
BY: /s/ Mark T. Walton
-------------------------
Mark T. Walton, President
<PAGE>
EXHIBIT C
TO STOCK TRANSFER RESTRICTION AND VOTING AGREEMENT
ADDENDUM AGREEMENT
------------------
Addendum Agreement made this ______ day of ____________________, 19_____ by
and between ______________________________ (the "new Shareholder"); the New
Shareholder's spouse; ________________________________ ___________ a Texas
corporation (the "Corporation"); and the other shareholders (the "Shareholders")
of the Corporation; who are parties to that certain Agreement dated _______,
19___ (the "Agreement"), between the Corporation and its shareholders and the
respective spouses of the Shareholders.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Corporation and the Shareholders and their respective spouses
entered into the Agreement to impose certain restrictions and obligations upon
themselves and the shares of stock (the "Stock") of the Corporation;
WHEREAS, the New Shareholder desires to become a shareholder of the
Corporation; and
WHEREAS, the Corporation and the Shareholders have required in the
Agreement that all persons being offered Stock must enter into an Addendum
Agreement binding the New Shareholder and the New Shareholder's spouse to the
Agreement to the same extent as if they were original parties thereto, so as to
promote the mutual interests of the Corporation, the Shareholders and the New
Share-
<PAGE>
holder by imposing the same restrictions and obligations on the New Shareholder
and the Stock to be acquired by him as were imposed upon the Shareholders under
the Agreement,
NOW, THEREFORE, in consideration of the mutual promises of the parties, and
as a condition of the purchase of Stock in the Corporation, the New Shareholder
and the spouse of the New Shareholder acknowledge that they have read the
Agreement. The New Shareholder and the spouse of the New Shareholder shall be
bound by, and shall have the benefit of, all the terms and conditions set out in
the Agreement to the same extent as if they were signatories to the Agreement.
This Addendum Agreement shall be attached to and become a part of the Agreement.
________________________________________
New Shareholder
________________________________________
Spouse of New Shareholder
Agreed to on behalf of the Shareholders and the Corporation pursuant to
Paragraph 13 (j) of the Agreement.
________________________________________
By: ___________________________________
President
Exhibit C
Page 2
<PAGE>
EXHIBIT 10.1(b)
FIRST MODIFICATION
TO THAT CERTAIN
STOCK TRANSFER AND RESTRICTION AGREEMENT
ORIGINALLY DATED AS OF JAN. 1, 1992
Whereas the Shareholders and spouses of such Shareholders of Travis Boats &
Motors, Inc. (the "Company") executed that certain Stock Transfer and
Restriction Agreement (the "Agreement") to be effective on January 1, 1992,
Now come the Shareholders pursuant to Section 13 (b) of the Agreement with the
desire to modify the Agreement as set forth herein:
Section 9 of the Agreement which was originally omitted shall be deleted in its
entirety and replaced with the following:
9. GIFT TRANSFERS OF STOCK- Shareholders may transfer such portions of
------------------------
Stock as necessary to provide for gift transfers under such IRS guidelines as
may be in existence at the time of such gift. However, any such Stock
transferred pursuant to this provision shall be subject to the following further
rules and restrictions:
(a) All voting rights with regard to such Stock transferred shall remain with
the Original Shareholder as if such transfer had not occurred.
(b) In the event the Original Shareholder shall be incapacitated without the
ability to vote, such voting rights shall succeed fully to the Board of
Directors.
(c) In the event of the death of the Original Shareholder and/or the
death of the new Shareholder receiving such gift, the gifted Stock shall be
subject to the terms and Conditions of the Stock Transfer Restriction and Voting
Agreement.
(d) All Stock transferred shall have the following typed on the back of such
certificates:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED AS TO SALE, TRANSFER,
EXCHANGE OR OTHER CONVEYANCE BY THAT CERTAIN STOCK TRANSFER RESTRICTION AND
VOTING AGREEMENT DATED AS OF JANUARY 1, 1992 AND ANY AND ALL MODIFICATIONS
THEREOF.
/s/ James C. Bohls /s/ Dawn S. Bohls 1/2/95
- ------------------ ----------------- ------
SHAREHOLDER SPOUSE DATE
<PAGE>
FIRST MODIFICATION
TO THAT CERTAIN
STOCK TRANSFER AND RESTRICTION AGREEMENT
ORIGINALLY DATED AS OF JAN. 1, 1992
Whereas the Shareholders and spouses of such Shareholders of Travis Boats &
Motors, Inc. (the "Company") executed that certain Stock Transfer and
Restriction Agreement (the "Agreement") to be effective on January 1, 1992,
Now come the Shareholders pursuant to Section 13 (b) of the Agreement with the
desire to modify the Agreement as set forth herein:
Section 9 of the Agreement which was originally omitted shall be deleted in its
entirety and replaced with the following:
9. GIFT TRANSFERS OF STOCK. Shareholders may transfer such portions of
------------------------
Stock as necessary to provide for gift transfers under such IRS guidelines as
may be in existence at the time of such gift. However, any such Stock
transferred pursuant to this provision shall be subject to the following further
rules and restrictions:
(a) All voting rights with regard to such Stock transferred shall remain with
the Original Shareholder as if such transfer had not occurred.
(b) In the event the Original Shareholder shall be incapacitated without the
ability to vote, such voting rights shall succeed fully to the Board of
Directors.
(c) In the event of the death of the Original Shareholder and/or the death of
the new Shareholder receiving such gift, the gifted Stock shall be subject to
the terms and Conditions of the Stock Transfer Restriction and Voting Agreement.
(d) All Stock transferred shall have the following typed on the back of such
certificates:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED AS TO SALE, TRANSFER,
EXCHANGE OR OTHER CONVEYANCE BY THAT CERTAIN STOCK TRANSFER RESTRICTION AND
VOTING AGREEMENT DATED AS OF JANUARY 1, 1992 AND ANY AND ALL MODIFICATIONS
THEREOF.
/s/ Robert C. Siddons /s/ Bonnie B. Siddons 1-2-95
- --------------------- --------------------- -------
SHAREHOLDER SPOUSE DATE
<PAGE>
FIRST MODIFICATION
TO THAT CERTAIN
STOCK TRANSFER AND RESTRICTION AGREEMENT
ORIGINALLY DATED AS OF JAN. 1, 1992
Whereas the Shareholders and spouses of such Shareholders of Travis Boats &
Motors, Inc. (the "Company") executed that certain Stock Transfer and
Restriction Agreement (the "Agreement") to be effective on January 1, 1992,
Now come the Shareholders pursuant to Section 13 (b) of the Agreement with the
desire to modify the Agreement as set forth herein:
Section 9 of the Agreement which was originally omitted shall be deleted in its
entirety and replaced with the following:
9. GIFT TRANSFERS OF STOCK. Shareholders may transfer such portions of
-----------------------
Stock as necessary to provide for gift transfers under such IRS guidelines as
may be in existence at the time of such gift. However, any such Stock
transferred pursuant to this provision shall be subject to the following further
rules and restrictions:
(a) All voting rights with regard to such Stock transferred shall remain with
the Original Shareholder as if such transfer had not occurred.
(b) In the event the Original Shareholder shall be incapacitated without the
ability to vote, such voting rights shall succeed fully to the Board of
Directors.
(c) In the event of the death of the Original Shareholder and/or the death of
the new Shareholder receiving such gift, the gifted Stock shall be subject to
the terms and Conditions of the Stock Transfer Restriction and Voting Agreement.
(d) All Stock transferred shall have the following typed on the back of such
certificates:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED AS TO SALE, TRANSFER,
EXCHANGE OR OTHER CONVEYANCE BY THAT CERTAIN STOCK TRANSFER RESTRICTION AND
VOTING AGREEMENT DATED AS OF JANUARY 1, 1992 AND ANY AND ALL MODIFICATIONS
THEREOF.
Signature Illegible /s/ Patricia J. Simpson 1-3-95
- ------------------- ------------------------ -------
SHAREHOLDERS SPOUSE DATE
<PAGE>
FIRST MODIFICATION
TO THAT CERTAIN
STOCK TRANSFER AND RESTRICTION AGREEMENT
ORIGINALLY DATED AS OF JAN. 1, 1992
Whereas the Shareholders and spouses of such Shareholders of Travis Boats &
Motors, Inc. (the "Company") executed that certain Stock Transfer and
Restriction Agreement (the "Agreement") to be effective on January 1, 1992,
Now come the Shareholders pursuant to Section 13 (b) of the Agreement with the
desire to modify the Agreement as set forth herein:
Section 9 of the Agreement which was originally omitted shall be deleted in its
entirety and replaced with the following:
9. GIFT TRANSFERS OF STOCK. Shareholders may transfer such portions of
------------------------
Stock as necessary to provide for gift transfers under such IRS guidelines as
may be in existence at the time of such gift. However, any such Stock
transferred pursuant to this provision shall be subject to the following further
rules and restrictions:
(a) All voting rights with regard to such Stock transferred shall remain with
the Original Shareholder as if such transfer had not occurred.
(b) In the event the Original Shareholder shall be incapacitated without the
ability to vote, such voting rights shall succeed fully to the Board of
Directors.
(c) In the event of the death of the Original Shareholder and/or the
death of the new Shareholder receiving such gift, the gifted Stock shall be
subject to the terms and Conditions of the Stock Transfer Restriction and Voting
Agreement.
(d) All Stock transferred shall have the following typed on the back of such
certificates:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED AS TO SALE, TRANSFER,
EXCHANGE OR OTHER CONVEYANCE BY THAT CERTAIN STOCK TRANSFER RESTRICTION AND
VOTING AGREEMENT DATED AS OF JANUARY 1, 1992 AND ANY AND ALL MODIFICATIONS
THEREOF.
/s/ John Brooks Ranier [SIGNATURE ILLEGIBLE] 2/25/95
- ----------------------- --------------------- -------
SHAREHOLDER SPOUSE DATE
<PAGE>
FIRST MODIFICATION
TO THAT CERTAIN
STOCK TRANSFER AND RESTRICTION AGREEMENT
ORIGINALLY DATED AS OF JAN. 1, 1992
Whereas the Shareholders and spouses of such Shareholders of Travis Boats &
Motors, Inc. (the "Company") executed that certain Stock Transfer and
Restriction Agreement (the "Agreement") to be effective on January 1, 1992,
Now come the Shareholders pursuant to Section 13 (b) of the Agreement With the
desire to modify the Agreement as set forth herein:
Section 9 of the Agreement which was originally omitted shall be deleted in its
entirety and replaced with the following:
9. GIFT TRANSFERS OF STOCK. Shareholders may transfer such portions of
-----------------------
Stock as necessary to provide for gift transfers under such IRS guidelines as
may be in existence at the time of such gift. However, any such Stock
transferred pursuant to this provision shall be subject to the following further
rules and restrictions:
(a) All voting rights with regard to such Stock transferred shall remain with
the Original Shareholder as if such transfer had not occurred.
(b) In the event the Original Shareholder shall be incapacitated Without the
ability to vote, such voting rights shall succeed fully to the Board of
Directors.
(c) In the event of the death of the Original Shareholder and/or the
death of the new Shareholder receiving such gift, the gifted Stock shall be
subject to the terms and Conditions of the Stock Transfer Restriction and
Voting Agreement.
(d) All Stock transferred shall have the following typed on the back of such
certificates:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED AS TO SALE, TRANSFER,
EXCHANGE OR OTHER CONVEYANCE BY THAT CERTAIN STOCK TRANSFER RESTRICTION AND
VOTING AGREEMENT DATED AS OF JANUARY 1, 1992 AND ANY AND ALL MODIFICATIONS
THEREOF.
/s/ Kelly Harber [SIGNATURE ILLEGIBLE]
- --------------------- --------------------- _______
SHAREHOLDER SPOUSE DATE
<PAGE>
FIRST MODIFICATION
TO THAT CERTAIN
STOCK TRANSFER AND RESTRICTION AGREEMENT
ORIGINALLY DATED AS OF JAN. 1, 1992
Whereas the Shareholders and spouses of such Shareholders of Travis Boats &
Motors, Inc. (the "Company") executed that certain Stock Transfer and
Restriction Agreement (the "Agreement") to be effective on January 1, 1992,
Now come the Shareholders pursuant to Section 13 (b) of the Agreement with the
desire to modify the Agreement as set forth herein:
Section 9 of the Agreement which was originally omitted shall be deleted in its
entirety and replaced with the following:
9. GIFT TRANSFERS OF STOCK. Shareholders may transfer such portions of
------------------------
Stock as necessary to provide for gift transfers under such IRS guidelines as
may be in existence at the time of such gift. However, any such Stock
transferred pursuant to this provision shall be subject to the following further
rules and restrictions:
(a) All voting rights with regard to such Stock transferred shall remain with
the Original Shareholder as if such transfer had not occurred.
(b) In the event the Original Shareholder shall be incapacitated without the
ability to vote, such voting rights shall succeed fully to the Board of
Directors.
(c) In the event of the death of the Original Shareholder and/or the death of
the new Shareholder receiving such gift, the gifted Stock shall be subject to
the terms and Conditions of the Stock Transfer Restriction and Voting Agreement.
(d) All Stock transferred shall have the following typed on the back of such
certificates:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED AS TO SALE, TRANSFER,
EXCHANGE OR OTHER CONVEYANCE BY THAT CERTAIN STOCK TRANSFER RESTRICTION AND
VOTING AGREEMENT DATED AS OF JANUARY 1, 1992 AND ANY AND ALL MODIFICATIONS
THEREOF.
/s/ Michael B Perrine [SIGNATURE ILLEGIBLE] ______
- --------------------- ---------------------
SHAREHOLDER SPOUSE DATE
<PAGE>
FIRST MODIFICATION
TO THAT CERTAIN
STOCK TRANSFER AND RESTRICTION AGREEMENT
ORIGINALLY DATED AS OF JAN. 1, 1992
Whereas the Shareholders and spouses of such Shareholders of Travis Boats &
Motors, Inc. (the "Company") executed that certain Stock Transfer and
Restriction Agreement (the "Agreement") to be effective on January 1, 1992,
Now come the Shareholders pursuant to Section 13 (b) of the Agreement with the
desire to modify the Agreement as set forth herein:
Section 9 of the Agreement which was originally omitted shall be deleted in its
entirety and replaced with the following:
9. GIFT TRANSFERS OF STOCK. Shareholders may transfer such portions of
------------------------
Stock as necessary to provide for gift transfers under such IRS guidelines as
may be in existence at the time of such gift. However, any such Stock
transferred pursuant to this provision shall be subject to the following further
rules and restrictions:
(a) All voting rights with regard to such Stock transferred shall remain with
the Original Shareholder as if such transfer had not occurred.
(b) In the event the Original Shareholder shall be incapacitated without the
ability to vote, such voting rights shall succeed fully to the Board of
Directors.
(c) In the event of the death of the Original Shareholder and/or the death of
the new Shareholder receiving such gift, the gifted Stock shall be subject to
the terms and Conditions of the Stock Transfer Restriction and Voting Agreement.
(d) All Stock transferred shall have the following typed on the back of such
certificates:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED AS TO SALE, TRANSFER,
EXCHANGE OR OTHER CONVEYANCE BY THAT CERTAIN STOCK TRANSFER RESTRICTION AND
VOTING AGREEMENT DATED AS OF JANUARY 1, 1992 AND ANY AND ALL MODIFICATIONS
THEREOF.
/s/ Mark Walton /s/ Debbie Walton 3/22/95
- --------------- ----------------- -------
SHAREHOLDER SPOUSE DATE
<PAGE>
FIRST MODIFICATION
TO THAT CERTAIN STOCK
TRANSFER AND RESTRICTION AGREEMENT
ORIGINALLY DATED AS OF JAN. 1, 1992
Whereas the Shareholders and spouses of such Shareholders of Travis Boats &
Motors, Inc. (the "Company") executed that certain Stock Transfer and
Restriction Agreement (the "Agreement") to be effective on January 1, 1992,
Now come the Shareholders pursuant to Section 13 (b) of the Agreement with the
desire to modify the Agreement as set forth herein:
Section 9 of the Agreement which was originally omitted shall be deleted in its
entirety and replaced with the following:
9. GIFT TRANSFERS OF STOCK. Shareholders may transfer such portions of
------------------------
Stock as necessary to provide for gift transfers under such IRS guidelines as
may be in existence at the time of such gift. However, any such Stock
transferred pursuant to this provision shall be subject to the following further
rules and restrictions:
(a) All voting rights with regard to such Stock transferred shall remain with
the Original Shareholder as if such transfer had not occurred.
(b) In the event the Original Shareholder shall be incapacitated without the
ability to vote, such voting rights shall succeed fully to the Board of
Directors.
(c) In the event of the death of the Original Shareholder and/or the death of
the new Shareholder receiving such gift, the gifted Stock shall be subject to
the terms and Conditions of the Stock Transfer Restriction and Voting Agreement.
(d) All Stock transferred shall have the following typed on the back of such
certificates:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED AS TO SALE, TRANSFER,
EXCHANGE OR OTHER CONVEYANCE BY THAT CERTAIN STOCK TRANSFER RESTRICTION AND
VOTING AGREEMENT DATED AS OF JANUARY 1, 1992 AND ANY AND ALL MODIFICATIONS
THEREOF.
/s/ Ron Spradling 4-20-95
- ----------------- ___________________ -------
SHAREHOLDER SPOUSE DATE
<PAGE>
FIRST MODIFICATION
TO THAT CERTAIN
STOCK TRANSFER AND RESTRICTION AGREEMENT
ORIGINALLY DATED AS OF JAN. 1, 1992
Whereas the Shareholders and spouses of such Shareholders of Travis Boats &
Motors, Inc. (the "Company") executed that certain Stock Transfer and
Restriction Agreement (the "Agreement") to be effective on January 1, 1992,
Now come the Shareholders pursuant to Section 13 (b) of the Agreement with the
desire to modify the Agreement as set forth herein:
Section 9 of the Agreement which was originally omitted shall be deleted in its
entirety and replaced with the following:
9. GIFT TRANSFERS OF STOCK. Shareholders may transfer such portions of
------------------------
Stock as necessary to provide for gift transfers under such IRS guidelines as
may be in existence at the time of such gift. However, any such Stock
transferred pursuant to this provision shall be subject to the following further
rules and restrictions:
(a) All voting rights with regard to such Stock transferred shall remain with
the Original Shareholder as if such transfer had not occurred.
(b) In the event the Original Shareholder shall be incapacitated without the
ability to vote, such voting rights shall succeed fully to the Board of
Directors.
(c) In the event of the death of the Original Shareholder and/or the death of
the new Shareholder receiving such gift, the gifted Stock shall be subject to
the terms and Conditions of the Stock Transfer Restriction and Voting Agreement.
(d) All Stock transferred shall have the following typed on the back of such
certificates:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED AS TO SALE, TRANSFER,
EXCHANGE OR OTHER CONVEYANCE BY THAT CERTAIN STOCK TRANSFER RESTRICTION AND
VOTING AGREEMENT DATED AS OF JANUARY 1, 1992 AND ANY AND ALL MODIFICATIONS
THEREOF.
/s/ E.D. Bohls /s/ Mary E. Bohls 1-3-95
- -------------- ----------------- ------
SHAREHOLDER SPOUSE DATE
<PAGE>
EXHIBIT 10.1(c)
SECOND AMENDMENT TO STOCK TRANSFER
----------------------------------
RESTRICTION AND VOTING AGREEMENT
--------------------------------
THIS SECOND AMENDMENT TO STOCK TRANSFER RESTRICTION AND VOTING AGREEMENT
(this "Amendment"), is executed as of the 14th day of December, 1995, by and
-----
among Travis Boats & Motors, Inc., a Texas corporation (the "Company") and the
shareholders of the Company, all of whose signatures appear below (the
"Shareholders").
R E C I T A L S:
- - - - - - - -
WHEREAS, the Shareholders and the Company have entered into that certain
Stock Transfer Restriction and Voting Agreement, dated as of January 1, 1992,
and amended as of January 3, 1995 (the "Stock Restriction Agreement"), pursuant
to which the sale and transfer of the Company's common stock is restricted;
WHEREAS, the Company is contemplating the issuance of common stock pursuant
to an initial public offering ("IPO");
WHEREAS, the Shareholders and the Company wish to amend certain provisions
of the Stock Restriction Agreement in contemplation of the IPO; and
WHEREAS, in the event the Company successfully completes the IPO, the
Shareholders and the Company wish to terminate the Stock Restriction Agreement.
A G R E E M E N T:
- - - - - - - - -
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
1. Termination of Stock Restriction Agreement. Upon consummation of the
------------------------------------------
IPO, the Stock Restriction Agreement shall be terminated and the sale and
transfer of Company common stock shall not be restricted in any manner
whatsoever by the terms of the Stock Restriction Agreement. Except as provided
below, the Stock Restriction Agreement shall remain in effect until the IPO has
been consummated.
<PAGE>
2. Waiver of Section 2 of Stock Restriction Agreement. The provisions of
--------------------------------------------------
Section 2 of the Stock Restriction Agreement, including but not limited to the
right of first refusal, shall be waived as of the date of execution of this
Amendment for the sole purpose of permitting the Shareholders of the Company to
participate in the IPO. In the event the IPO is not consummated on or before
June 30, 1995, this waiver of Section 2 shall expire and the provisions of
Section 2 shall become applicable and enforceable.
3. Waiver of Section 3 of Stock Restriction Agreement. The provisions of
--------------------------------------------------
Section 3 of the Stock Restriction Agreement, regarding the fixed purchase price
for shares upon the death of a shareholder shall be waived. In the event the
IPO is not consummated on or prior to June 30, 1995, this waiver of Section 3
shall expire and the provisions of Section 3 shall become applicable and
enforceable.
4. General Waiver. By this Amendment, the Shareholders do hereby waive
--------------
any other provisions of the Stock Restriction Agreement not mentioned herein
that will, in any manner whatsoever, limit the ability of the Company to offer
stock pursuant to the IPO.
5. Counterparts. This Amendment may be executed in multiple counterparts.
------------
All such counterparts shall be deemed an original, shall be construed together,
and shall constitute one and the same instrument.
2
<PAGE>
"COMPANY"
TRAVIS BOATS & MOTORS, INC.
/s/ Mark T. Walton
-----------------------------------
Mark T. Walton, President
"SHAREHOLDERS"
/s/ E. D. Bohls
-----------------------------------
E. D. Bohls
/s/ James Bohls
-----------------------------------
James Bohls
/s/ Kelly Harber
-----------------------------------
Kelly Harber
/s/ Mike Perrine
-----------------------------------
Mike Perrine
/s/ John Brooks Ranier
-----------------------------------
John Brooks Ranier
/s/ R.C. Siddons
-----------------------------------
R.C. Siddons
/s/ Joe Simpson
-----------------------------------
Joe Simpson
/s/ Mark T. Walton
-----------------------------------
Mark T. Walton
2
<PAGE>
/s/ Billy Breed
-----------------------------------
Billy Breed
3
<PAGE>
/s/ Charlie Bell
-----------------------------------
Charlie Bell
4
<PAGE>
/s/ Jesse Cox
-----------------------------------
Jesse Cox
5
<PAGE>
/s/ Rob Harrell
-----------------------------------
Rob Harrell
6
<PAGE>
/s/ Ray Leydecker
-----------------------------------
Ray Leydecker
7
<PAGE>
/s/ Jim McManus
-----------------------------------
Jim McManus
8
<PAGE>
/s/ Ron Spradling
-----------------------------------
Ron Spradling
9
<PAGE>
EXHIBIT 10.2(B)
[LOGO OF OMC APPEARS HERE]
1996
Dealer Agreement
THIS AGREEMENT is made by and between the Marine Power Products Group of
Outboard Marine Corporation, 100 Sea Horse Drive, Waukegan, Illinois. (the
"Company").
and TRAVIS BOAT AND MOTORS INC DBA/TRAVIS BOATING CENTER
-----------------------------------------------------------------------------
located at 13045 RESEARCH BLVD AUSTIN TX 78750 (the "Dealer").
------------------------------------------------------
Street Address, city, State, Zip Code
In consideration of the promises contained in this Agreement, it is agreed
as follows:
PURPOSE: This Agreement describes the relationship between the Company and
Dealer concerning the purchase, sale and service of Company products. The
products covered by this Agreement are described more fully in Products section
of this Agreement.
Dealer will not sell, display, advertise, promote or service Products nor
display Company trademarks, tradenames or logos from any location other than the
location specified above unless authorized to do so by the Company in a separate
written Dealer Agreement.
PRODUCTS: Dealer is appointed as no authorized Dealer for the following products
and OMC parts and accessories for those products:
[X] JOHNSON OUTBOARDS [X] OMC STERN DRIVES
PURCHASE REQUIREMENTS: Dealer has agreed to the following Purchase Requirements
for outboard motors purchased from Company (excluding outboards purchased as
part of a boat package). Dealer agrees that these Purchase Requirements are
reasonable and obtainable and that the Company is relying upon Dealer to meet
these Purchaser Requirements:
1996 FISCAL YEAR (OCTOBER 1, 1995. SEPTEMBER 30, 1996)
Gas Outboards (units) 300 Electric Outboards (units) 100
----- -----
/s/M /s/DG
-------------------- ---------------------
Dealer's Initial Company's Initial
Dealer also agrees to maintain at all times, at the location listed above, an
inventory of not less than 100 units of new, current
--------------------------
model JOHNSON gasoline outboard motors and an inventory of OMC parts and
---------
accessories and lubricants adequate to support the Product.
CERTIFICATE OF RESALE: (Applies only where Dealer is subject to local or state
sales and or use taxes). Dealer represents that it holds a seller's permit
1742024798 which was issued in accordance with the TEXAS (state)
----------------------
sales and/or use tax law. All products and other materials purchased from
Company are for resale, lease or rental by Dealer. In the event Dealer uses the
Products or materials for any other purpose subjecting them to sales or use tax.
Dealer is responsible for reporting and paying such taxes.
ANY CAUSE OF ACTION, CLAIM, SUIT OR DEMAND BY DEALER, ALLEGEDLY ARISING FROM OR
RELATING TO THE TERMS OF THIS AGREEMENT OR THE RELATIONSHIP OF THE PARTIES,
SHALL BE BROUGHT IN THE FEDERAL DISTRICT COURT FOR THE DISTRICT IN WHICH COMPANY
MAINTAINS ITS PRINCIPAL OFFICES OR IN THE CIRCUIT OF THE STATE COURT IN WHICH
COMPANY MAINTAINS ITS PRINCIPAL OFFICES: DEALER IRREVOCABLY ADMITS TO AND
CONSENTS TO THE JURISDICTION OF SAID COURTS THE PROVISIONS OF THIS PARAGRAPH
SURVIVE THE TERMINATION OF THIS AGREEMENT AND SHALL BIND THE CORPORATION
OFFICERS AND DIRECTORS IF DEALER IS A CORPORATION.
COMPANY AND DEALER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY
RIGHT TO A TRIAL BY JURY IN ANY SUIT, ACTION, PROCEEDING OR COUNTERCLAIM: A)
CONCERNING ANY RIGHTS UNDER THIS AGREEMENT. ANY RELATED AGREEMENT OR UNDER ANY
OTHER DOCUMENT OR AGREEMENT BETWEEN THE PARTIES, OR B) ARISING FROM ANY
RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT AND AGREE THAT ANY SUCH
SUIT, ACTION, PROCEEDING OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY THIS PROVISION IS A MATERIAL INDUCEMENT FOR COMPANY ENTERING INTO
THIS DEALER AGREEMENT.
Dealer acknowledges that it has read this Agreement, including the terms printed
on the reverse side of this page, understands the terms and conditions contained
in this Agreement and agrees to be bound by these terms and conditions.
EXECUTION
Is Dealer a corporation? Yes Y No
----- ______
Federal Tax Identification No. 74-2024798
------------------------------------
Check one: ______ SSN X Emp.ID. No
----
Federal Taxpayer Name (IRS records):
TRAVIS BOAT AND MOTORS INC
- -----------------------------------------------
(DEALER)
By: /s/ Mark Walton
-------------------------------------------
(Print Name Here) Mark Walton
------------------------------
Title: PRES
----------------------------------------
Date: 10/6/95
-----------------------------------------
Dealer's Home OMC P&A Distributor is DALLAS
-----------
Dealer Phone Number 512-250-9000
---------------------------
Dealer FAX Number 512-435-0459
---------------------------
Recommended by: /s/ DMFL
-------------------------------
OUTBOARD MARINE CORPORATION
By: /s/ Henry H. Hegel
--------------------------------------------
(Print Name Here) HENRY H. HEGEL
------------------------------
Title: DIRECTOR, SALES
----------------------------------------
Date: OCT 13 1995
------------------------------------------
DEALER'S COPY -- TO BE RETURNED TO DEALER UPON ACCEPTANCE BY OMC
<PAGE>
SALES EFFORT: (Does not apply to OMC Stern Drives.) This Agreement authorizes
sales of Products by Dealer to end user retail customers only. Dealer recognizes
that it is not established as a wholesaler or distributor and agrees to refrain
from reselling Products to customers other than end users. Dealer agrees to use
its best efforts to promote the sale of Products to end users in Dealer's area.
Dealer's sales efforts will at all times be in accordance with Company's
policies and procedures as may be issued from time to time.
The parties recognize the importance and value of service to the customer
in establishing and maintaining customer satisfaction and the reputation of the
Company, the Dealer and the Products. Therefore, Dealer agrees to concentrate
its selling and advertising efforts in the area where and to customers to whom
Dealer can readily provide service.
Dealer agrees to undertake all advertising, promotional and selling
activities as may reasonably be required to meet the market potential for
Products in Dealer's area.
Dealer agrees to abide by the Company's written guidelines concerning
advertising.
The Company will provide Dealer with sales brochures, catalogs and other
promotional materials. In addition, the Company may provide Dealer with sales,
marketing and promotional assistance and advice as may be available from time to
time.
Dealer agrees to display Products in its showroom in a prominent manner and
in such quantities as Company may recommend.
Dealer will identify its place of business as a Dealer of Products by means
of outdoor signage and other means, all consistent with the image and quality of
Products.
FORECASTS & ORDERS: Dealer agrees to provide the Company with forecasts and firm
orders as the Company reasonably may require and according to programs and
procedures that the Company may issue from time to time.
Dealer understands that forecasts and orders are accepted at the Company's
main offices only. The Company may reject any order in whole or in part if such
order is submitted in violation of, or may lead to the violation of, any
provision of this Agreement. The Company will use its best efforts to fill all
accepted orders but will not be liable to Dealer for any delay or inability to
fill an accepted order for any reason.
SERVICE & WARRANTY: The Company and Dealer recognize the importance of providing
prompt and courteous service to all owners of the Products. The requirements of
this section are intended to ensure that such service is available and provided.
Dealer will maintain a service department staffed with employees trained in
the service of Products. In addition, Dealer agrees to employ at least one (1)
technician that has successfully completed a Company service training course for
Products within the past two (2) years.
Dealer agrees that at least once per model year, at least one (1) employee
will attend any service clinic or seminar which Company may hold.
The Company will, from time to time, establish a warranty which will apply
to the Products. A written statement of the Company's warranty will be provided
to Dealer. There is no other warranty which applies to the Products. The Dealer
has no authority to alter, amend or modify Company's warranty.
Dealer agrees to provide prompt warranty and repair service to all
customers of Product, regardless of where the Product was purchased.
All warranty work on Products will be performed by Dealer in accordance
with Company's warranty procedures and policies as established from time to time
by the Company.
Dealer will be reimbursed for warranty labor at the rate agreed to by
Dealer and Company and in the manner specified in the Company's warranty
policies and procedures.
Dealer agrees to use only genuine OMC parts for warranty service.
Dealer will purchase all recommended service tools, testing equipment,
service literature, parts catalogs, and microfiche pertaining to the service of
Products.
The Company, from time to time, will establish service policies, standards,
guidelines, procedures and programs. Dealer agrees to abide by such policies,
standards, guidelines, procedures and programs.
Prior to delivery of the Product to the customer, the Dealer will inspect
and test the Product and all its systems to ensure that the Product will operate
properly in the hands of the customer. At the time of delivery of the Product to
the customer, the Dealer will instruct the customer in the proper use and
operation of the Product.
Upon termination or expiration of this Agreement, Dealer shall no longer be
eligible to perform warranty work.
PRICES & TERMS: All purchases of Products by Dealer will be at prices and
discounts established by the Company from time to time.
Terms of payment will be cash or other such terms as may be granted by
Company from time to time in its sole discretion. Company may change such terms
at any time in its sole discretion.
In the event terms other than cash are granted, all accounts not paid in
accordance with such terms will be assessed a service fee at the maximum amount
permitted by law in the jurisdiction in which Dealer is located, not to exceed
1 1/2% per month. In addition, Dealer agrees to pay the Company reasonable
attorneys' fees and costs incurred in connection with any collection proceedings
against Dealer. Dealer shall be liable for all costs and deficiencies to Company
resulting from the repossession and resale of Products whether by Company or
third parties. In addition, Dealer shall pay to Company all rebates or discounts
charged back to Dealer by Company as a result of any repossessing.
Company may setoff any amounts owned Dealer by Company against amounts owed
to Company. In addition, Company may use any amounts owed to Dealer by Company
as an offset against any amounts which Dealer may owe to any subsidiary,
affiliate, product group, division or facility of Outboard Marine Corporation.
TERM OF AGREEMENT, ASSIGNMENT, TERMINATION:
This Agreement will be effective on October 1, 1995 or when a fully
executed Agreement is returned to Dealer, whichever is later, and shall expire
on September 30, 1996.
In no event will this Agreement become effective until it is accepted and
signed by the Company at its main offices and returned to Dealer. This Agreement
may be terminated by either party without cause, with ninety (90) days written
notice.
This Agreement may be terminated immediately upon the occurrence of any of
the following:
a) any breach or violation or any material provision of this Agreement,
including sales to other than end users, warranty or other fraud, failure to pay
for Products on agreed upon terms, failure to provide adequate service; also,
failure to meet service training requirements; failure to purchase required
tools/equipment; and failure to comply with Company's policies and procedures.
b) a change in location of the closing of Dealer's place of business.
c) any repossession of Products whether by Company or a third party.
Such termination will be effective upon the mailing of written notice of
termination.
Either party may terminate this Agreement immediately if the other party
experiences a change in control of a majority of its voting stock or in the
event of the death, resignation or termination of a majority of its principal
officers or partners.
This Agreement may be assigned by Dealer with the prior written approval of
Company. Prior to approving an assignment, the Company will have the opportunity
to investigate the proposed assignee and to evaluate the proposed assignee's
qualification, reputation and financial capability to act as a Dealer of
Products. Company may, at its option, execute a new Dealer Agreement in lieu of
approving an assignment.
Upon the effective date of expiration or termination, Company will have no
further obligation, responsibility or liability to Dealer. The expiration or
termination of this Agreement shall not relieve Dealer of the obligation to pay
Company for Products previously shipped.
In the event this Agreement is terminated or not renewed by either Party,
Company shall have the option, but not the obligation, to repurchase any or all
of the Products in Dealer's inventory as of the effective date of non renewal or
termination, Dealer shall provide to Company upon request a complete list of all
Products in Dealer's inventory. Dealer agrees to sell to Company such Products
as Company may designate at the price which Dealer paid for such Products net of
rebates, discounts and programs and adjusted for damage or out of box condition.
USE OF NAME: Dealer agrees not to use any trademark or tradename of Company as a
whole or a part of the title of Dealer's business. Dealer agrees that
immediately upon the expiration or termination of this Agreement, Dealer will
remove all signs, markings, telephone and directory listings or any other
markings containing trademarks or tradenames of the Company and to discontinue
any advertising, promotion or publicity which tend to indicate that Dealer is a
dealer of Products.
GENERAL PROVISIONS: Dealer is not an agent of Company and agrees not to
represent itself as such. The Company reserves the right to change the
construction, specifications, prices, discounts or terms of sale of its Products
without notice and without obligation as to Products previously shipped or sold.
Dealer agrees that this Agreement does not constitute the grant of a
franchise or franchise rights, nor does it confer an exclusive territory upon
Dealer. Dealer acknowledges that it has not been required to, nor has it paid
any franchise fee in connection with the execution of this Agreement.
Dealer agrees that all customer lists compiled by Company from warranty
registration cards or other information received by Company from Dealer are the
exclusive property of Company and may be used by Company in any manner. The
failure of either party at any time to enforce any obligation, exercise any
option or require performance under the provisions of this Agreement will not be
construed to be a waiver of such provisions, nor affect the right of each party
to enforce subsequently each and every provision of this Agreement.
If any part of this Agreement is found to be invalid, the Agreement shall
be deemed separable and the remainder shall remain in full force and effect.
The instrument and the referenced policies, procedures, standards, and
guidelines constitute the entire agreement of the parties concerning this
subject matter. No other understanding or agreement will apply to this Agreement
unless in writing and expressly made a part of this Agreement.
There shall be no obligation to either party to renew this Agreement upon
its expiration nor shall there be any liability for either party's failure to
renew
<PAGE>
EXHIBIT 10.5(a)
Form # 1290
[LOGO OF BOMBARDIER CAPITAL INC. APPEARS HERE] INVENTORY SECURITY AGREEMENT
AND POWER OF ATTORNEY
================================================================================
1. PARTIES: The parties to this Agreement are Bombardier Capital Inc.
("BCI") and the Dealer who has signed at the end of this Agreement
("Dealer").
2. ADVANCES: At Dealer's request, BCI, at its option, will advance funds
for the acquisition of Dealer's Inventory ("Inventory"), or for such other
purpose satisfactory to BCI, secured, in whole part, by a security interest
in the Collateral described in Paragraph 4 below. In each case, BCI will
send Dealer a schedule or schedules as described in Paragraph 3 below. If
Dealer does not agree with the schedule(s), it must immediately notify BCI
in writing of any objections. Dealer's failure to notify BCI of its
objections within seven (7) days shall constitute an acceptance of the
schedule(s).
3. PAYMENT: Dealer shall repay BCI in accordance with either or a
combination of the following Plans, which shall be chosen at the sole
discretion of BCI:
a) Pay As Sold Plan: BCI shall deliver to Dealer a schedule or schedules
listing each item of Inventory on which BCI has advanced funds and the
amount of the advance. Immediately upon the sale of each item of
Inventory, Dealer will pay to BCI the total amount due on that item.
Dealer will pay to BCI the total amount due on unsold Inventory within
the period established from time to time by BCI or upon demand by BCI,
whichever first occurs and will pay such curtailments as BCI may
require.
b) Scheduled Payment Plan: BCI shall deliver to Dealer a schedule or
schedules listing the repayment terms for the Inventory on which it
has advanced funds and the amount of the advance. Dealer will
thereafter pay to BCI the payment due, when due or upon demand by BCI,
whichever comes first, as shown on the schedule(s) BCI supplies
Dealer.
Under either Plan, Dealer agrees that:
a) Dealer will pay BCI financing and service charges, insurance charges
(if any), and late charges according to and upon receipt of the
billing statements which BCI delivers to Dealer and within the time
specified by BCI.
b) BCI, at its discretion, may at any time and without notice to Dealer
apply or reapply any monies received from Dealer in payment of any
Dealer's obligations or liabilities to BCI, in such order of
application as BCI may determine.
4. COLLATERAL:
a) In order to secure repayment to BCI of all extensions of credit made
by BCI under this Agreement, and to secure payment of all other debts
or liabilities and performance of all obligations of Dealer to BCI,
whether now existing or hereafter existing, Dealer agrees that BCI
shall have and hereby grants to BCI a security interest in all of the
rights, titles and interests (whether now existing or hereafter
arising or acquired from time to time) of the Dealer in, to and under
all Inventory, including but not limited to, all goods manufactured
and/or sold by any manufacturer, distributor or seller, which
inventory is owned by Dealer or in which Dealer has an interest, the
purchase of which was financed or floorplanned by BCI for the Dealer
of whatever kind or nature, wherever located, and all returns,
repossessions, exchanges, substitutions, replacements, attachments,
parts, accessories and accessions thereto and thereof, and all other
goods used or intended to be used in conjunction therewith and all
proceeds and products thereof, and documents relating thereto (the
"Collateral").
b) Dealer shall execute and deliver such financing statements and
amendments thereto and all further writings as BCI shall request to
accomplish the purpose of this Agreement and Dealer shall bear all the
costs of recording and perfection.
5. DEALER'S DUTIES: Dealer agrees:
a) That upon purchase of each item of Inventory, Dealer shall deliver to
BCI upon request, the Certificate of Title or Certificate of Origin
issued for same, if any, and BCI shall have the right to have its
lien, encumbrance or security interest noted thereon and/or retain
such Certificate of Origin.
b) To sell and deliver Inventory only in the ordinary course of business
and not to use, rent or dispose of Collateral except as herein
provided, nor permit any encumbrance upon the Collateral without BCI's
prior written consent.
c) To keep all Collateral in good order, repair and operating condition
and to pay all transportation and storage charges on the Collateral.
1
<PAGE>
d) To pay immediately all taxes, expenses, assessments and charges which
may now or hereafter be levied or assessed against the Collateral.
e) To hold any funds and proceeds payable to BCI, in the same form as
received, IN TRUST for BCI, separate and apart from Dealer's funds and
goods. BCI shall apply all amounts so received from Dealer toward the
payment of and liabilities of Dealer, in such order of application as
BCI may determine.
f) To reimburse BCI for BCI's expense and cost incurred in connection
with inspections of the Collateral, and its collection and
administration costs.
g) That for purposes of determining the rate of charge hereunder, any
other language herein to the contrary notwithstanding, charges shall
be deemed to have been accrued and accruing from the date of purchase
of each item of inventory and shall be determined on an annualized
basis (without regard to any "free-flooring" period).
h) Dealer agrees to keep all Collateral insured against risks covered by
Standard forms of fire, theft and extended coverage insurance and such
other risks as may be required by BCI, in such amounts and under such
policies issued by such insurance company or companies as are
satisfactory to BCI. BCI shall be named either as a co-insured or
under a loss payable clause, to the extent its interest may appear.
Should Dealer fail to procure such insurance upon request, BCI may,
but is not obligated to, procure the same and collect the cost thereof
from Dealer.
i) To keep all of the Collateral only at its place(s) of business
referred to in Section 13 and to permit BCI to inspect the Collateral
during Dealer's business hours and at other reasonable times and to
inspect and make copies of Dealer's books and records.
j) Dealer shall at all times keep full and accurate records of its
business and Dealer shall upon demand, furnish BCI all such
information regarding Dealer's business and financial condition as BCI
may reasonably request.
k) That BCI may hold any sums or monies belonging to the Dealer which
come into the possession of BCI any may apply all or a portion of
said sums or monies to any outstanding indebtedness, liabilities or
obligations of the Dealer.
6. POWER OF ATTORNEY: Dealer grants to BCI:
a) A power of attorney under which BCI may a) execute on behalf of Dealer
any notes, chattel paper, UCC financing statements, amendments thereto
and continuations thereof (or similar statements of notice,
registration, amendment or continuation under the laws of any
jurisdiction), or other writing in connection with this Agreement or
the Collateral as BCI may require for the purpose of protecting,
maintaining or enforcing the Collateral or the security interest
granted to BCI in the Collateral and b) adjust, make, pursue, settle
and collect any insurance claim in connection with this Agreement, as
attorney-in-fact for Dealer.
7. DEFAULT: The following shall constitute default under this Agreement;
a) Any breach or failure of Dealer to observe or perform any of its
obligations, covenants or undertakings hereunder.
b) Misrepresentation by Dealer to BCI in connection with the business and
financial condition of Dealer or relating to Collateral.
c) Death or dissolution of Dealer, or if any action or proceedings to
dissolve Dealer be instituted.
d) Dealer becoming insolvent or making an assignment for the benefit of
creditors, or if a Petition in Bankruptcy is filed by or against
Dealer, or a complaint in equity or other proceedings for the
appointment of a receiver for Dealer is filed, or if proceedings for
reorganization or for composition with creditors under any law be
instituted by or against Dealer, or if any of the goods of Dealer
shall be attached.
e) BCI in good faith deems itself insecure.
8. REMEDIES: If Dealer defaults, BCI can, at its option and without notice,
demand immediate payment of all obligations under this Agreement and any
other indebtedness owed to BCI. BCI shall have all the rights and remedies
of a secured party under the Uniform Commercial Code in effect in the
jurisdiction where the Collateral is kept including, but not limited to,
the right to enter any of the Dealer's premises with or without legal
process, but without force, and to take possession and remove the
Collateral. At BCI's request and to the extent Dealer may lawfully do so,
Dealer will assemble, prepare for removal and make available to BCI at a
place to be designated by BCI which is reasonably convenient to both
parties such items of Collateral as BCI may deem sufficient to cover all of
Dealer's obligations to BCI. Dealer agrees that private sale of any item
financed by BCI at the amount owed to BCI on that item, less a reasonable
restocking charge shall be commercially reasonable method of disposition.
Five (5) days written notice of public sale date or the date after which a
private sale may occur shall be a reasonable notice. BCI shall not be
chargeable with responsibility for the accuracy or validity of
2
<PAGE>
any document or for the existence or value of any Collateral. Dealer
further agrees to pay reasonable attorney's fees and legal expenses
incurred by BCI in enforcing this Agreement after default by Dealer. To the
extent not prohibited by law, Dealer waives all valuation and exemption
laws and releases all right of appeal after payment in full.
9. TIME AND ACKNOWLEDGEMENT: Time is of the essence in the performance of
Dealer's duties, but the failure of BCI to enforce it rights under this
Agreement shall not be deemed a waiver of BCI's rights under this
Agreement. Dealer will not assert against BCI any claim or defense Dealer
may have against any seller of goods to Dealer. Dealer acknowledges receipt
of a copy of this Agreement.
10. ASSIGNMENT: This Agreement may be assigned by BCI but Dealer may not assign
this Agreement without the prior written consent of BCI.
11. MODIFICATION: This Agreement may not be modified, altered or amended in any
manner whatsoever, except by a further agreement in writing signed by both
Dealer and BCI.
12. GOVERNING LAW: The validity, enforceability and interpretation of this
Agreement shall be governed by the laws of the State of New York.
13. DEALER BUSINESS AND WAREHOUSE ADDRESSES:
(Attached a schedule if more space required)
12300 ???? 10 West
San Antonio TX 78230
[SEAL]
Effective as of the ________ day of _________________, 19______.
DEALER:
Travis Boat & Motors, Inc.
------------------------------------
WITNESS: Type or print name of Dealer
(OR ATTEST)
By: /s/ Mark Walton
---------------------------------
/s/ Kathy Dela Rosa
- ---------------------------------
Name: Mark Walton
-------------------------------
[SIGNATURE ILLEGIBLE] (SEAL) Title: President
- --------------------------------- ------------------------------
Asst. Secretary
Accepted by:
BOMBARDIER CAPITAL INC.
By ______________________________
Title ___________________________
3
<PAGE>
ACKNOWLEDGEMENT BY DEALER IF INDIVIDUAL(S) OR PARTNERSHIP
STATE OF
COUNTY OF
On this the ____ day of _______________, 19__, before me personally
appeared _________________________ known to me to be the person(s) whose name(s)
is (are) subscribed to the foregoing Inventory Security Agreement and Power of
Attorney and acknowledged that he (they) voluntarily executed the same for the
purposes therein contained.
In Witness Whereof I Hereunto set my hand and Official Seal.
_______________
Notary Public
ACKNOWLEDGEMENT BY DEALER IF A CORPORATION
STATE OF
COUNTY OF
On this the 30th day of November, 1993, before me personally appeared MARK
WALTON who acknowledged himself to be the PRESIDENT of TRAVIS BOATS & MOTORS,
INC., a corporation, and that he, being authorized by the Board of Directors,
voluntarily executed the foregoing Inventory Security Agreement and Power of
Attorney for the purposes therein contained, by signing the name of the
corporation by himself.
In Witness Whereof I Hereunto set my hand and Official Seal
[SIGNATURE ILLEGIBLE]
-----------------------------------
Notary Public
4
<PAGE>
EXHIBIT 10.5(b)
[LOGO OF BOMBARDIER CAPITAL INC. APPEARS HERE] INVENTORY SECURITY AGREEMENT
AND POWER OF ATTORNEY
================================================================================
1. PARTIES: The parties to this Agreement are Bombardier Capital Inc.
("BCI") and the Dealer who has signed at the end of this Agreement
("Dealer").
2. ADVANCES: At Dealer's request, BCI, at its option, will advance funds
for the acquisition of Dealers's Inventory ("Inventory"), or for such other
purpose satisfactory to BCI, secured, in whole part, by a security interest
in the Collateral described in Paragraph 4 below. In each case, BCI will
send Dealer a schedule or schedules as described in Paragraph 3 below. If
Dealer does not agree with the schedule(s), it must immediately notify BCI
in writing of any objectives. Dealer's failure to notify BCI of its
objections within seven (7) days shall constitute an acceptance of the
schedule(s).
3. PAYMENT: Dealer shall repay BCI in accordance with either or a
combination of the following Plans, which shall be chosen at the sole
discretion of BCI:
a) Pay As Sold Plan: BCI shall deliver to Dealer a schedule or
schedules listing each item of Inventory on which BCI has advanced
funds and the amount of the advance. Immediately upon the sale of each
item of Inventory, Dealer will pay to BCI the total amount due on that
item. Dealer will pay to BCI the total amount due on unsold Inventory
within the period established from time to time by BCI or upon demand
by BCI, whichever first occurs and will pay such curtailments as BCI
may require.
b) Scheduled Payment Plan: BCI shall deliver to Dealer a schedule or
schedules listing the repayment terms for the Inventory on which it
has advanced funds and the amount of the advance Dealer will
thereafter pay to BCI the payment due, when due or upon demand by BCI,
whichever comes first, as shown on the schedule(s) BCI supplies
Dealer.
Under either Plan, Dealer agrees that:
a) Dealer will pay BCI financing and service charges, insurance charges
(if any), and late charges according to and upon receipt of the
billing statements which BCI delivers to Dealers and within the time
specified by BCI.
b) BCI, at its discretion, may at any time and without notice to Dealer
apply or reapply any monies received from Dealer in payment of any
Dealer's obligations or liabilities to BCI, in such order of
application as BCI may determine.
4. COLLATERAL:
a) In order to secure repayment to BCI of all extensions of credit made
by BCI under this Agreement, and to secure payments of all other debts
or liabilities and performance of all obligations of Dealer to BCI,
whether now existing or hereafter existing, Dealer agrees that BCI
shall have and hereby grants to BCI a security interest in all of the
rights, titles and interests (whether now existing or hereafter
arising or acquired from time to time) of the Dealer in, to and under
all Inventory, including but not limited to, all goods manufactured
and/or sold by any manufacturer, distributor or seller, which
inventory is owned by Dealer or in which Dealer has an interest, the
purchase of which was financed or foorplanned by BCI for the Dealer of
whatever kind or nature, wherever located, and all returns,
repossessions, exchanges, substitutions, replacements, attachments,
parts, accessories and accessions thereto and thereof, and all other
goods used or intended to be used in conjunction therewith and all
proceeds and products thereof, and documents relating thereto (the
"Collateral").
b) Dealer shall execute and deliver such financing statements and
amendments thereto and all further writings as BCI shall request to
accomplish the purpose of this Agreement and Dealer shall bear all the
cost of recording and perfection.
5. DEALER'S DUTIES: DEALER AGREES:
a) That upon purchase of each item of Inventory, Dealer shall deliver to
BCI upon request, the Certificate of Title or Certificate of Origin
issued for same, if any, and BCI shall have the right to have its
????, encumbrance or security interest noted thereon and/or retain
such Certificate of Origin.
b) To sell and deliver Inventory only in the ordinary course of business
and not to use, rent or dispose of Collateral except as herein
provided, nor permit any encumbrance upon the Collateral without
BCI's prior written consent.
c) To keep all Collateral in good order, repair and operating condition
and to pay all transportation and storage charges on the Collateral.
1
<PAGE>
d) To pay immediately all taxes, expenses, assessments and charges which
may now or hereafter be levied or assessed against the Collateral.
e) To hold any funds and proceeds payable to BCI, in the same form as
received, IN TRUST for BCI, separate and apart from Dealer's funds and
goods. BCI shall apply all amounts so received from Dealer toward the
payment of and liabilities of Dealer, in such order of application as
BCI may determine.
f) To reimburse BCI for BCI's expense and cost incurred in connection
with inspections of the Collateral, and its collection and
administration costs.
g) That for purposes of determining the rate of charge hereunder, any
other language herein to the contrary notwithstanding, charges shall
be deemed to have been accrued and accruing from the date of purchase
of each item of Inventory and shall be determined on an annualized
basis (without regard to any "free-flooring" period).
h) Dealer agrees to keep all Collateral insured against risks covered by
standard forms of fire, theft and extended coverage insurance and such
other risks as may be required by BCI, in such amounts and under such
policies issued by such insurance company or companies as are
satisfactory to BCI. BCI shall be named either as a co-insured or
under a loss payable clause, to the extent its interest may appear.
Should Dealer fail to procure such insurance upon request, BCI may,
but is not obligated to, procure the same and collect the cost thereof
from Dealer.
i) To keep all of the Collateral only at its place(s) of business
referred to in Section 13 and to permit BCI to inspect the Collateral
during Dealer's business hours and at other reasonable times and to
inspect and make copies of Dealer's books and records.
j) Dealer shall at all times keep full and accurate records of its
business and Dealer shall upon demand, furnish BCI all such
information regarding Dealer's business and financial condition as BCI
may reasonably request.
k) That BCI may hold any sums or monies belonging to the Dealer which
come into the possession of BCI and may apply all or a portion of said
sums or monies to any outstanding indebtedness, liabilities or
obligations of the Dealer.
6. POWER OF ATTORNEY: Dealer grants to BCI:
a) A power of attorney under which BCI may a) execute on behalf of
Dealer, notes, chattel paper, UCC financing statements, amendments
thereto and continuations thereof (or similar statements of notice,
registration, amendment or continuation under the laws of any
jurisdiction), or other writing in connection with this Agreement or
the Collateral as BCI may require for the purpose of protecting,
maintaining or enforcing the Collateral or the security interest
granted to BCI in the Collateral and b) adjust, make pursue, settle
and collect any insurance claim in connection with this Agreement, as
attorney-in-fact for Dealer.
7. DEFAULT: The following shall constitute default under this Agreement:
a) Any breach or failure of Dealer to observe or perform any of its
obligations, covenants or undertakings hereunder.
b) Misrepresentation by Dealer to BCI in connection with the business and
financial condition of Dealer or relating to Collateral.
c) Death or dissolution of Dealer, or if any action or proceedings to
dissolve Dealer be instituted.
d) Dealer becoming insolvent or making an assignment for the benefit of
creditors, or if a Petition in Bankruptcy is filed by or against
Dealer, or a complaint in equity or other proceedings for the
appointment of a receiver for Dealer is filed, or if proceedings for
reorganization or for composition with creditors under any law be
instituted by or against Dealer, or if any or all of the goods of
Dealer shall be attached.
e) BCI in good faith deems itself insecure.
8. REMEDIES: If Dealer defaults, BCI can, at its option and without notice,
demand immediate payment of all obligations under this Agreement and any
other indebtedness owed to BCI. BCI shall have all the rights and remedies
of a secured party under the Uniform Commercial Code in effect in the
jurisdiction where the Collateral is kept including, but not limited to,
the right to enter any of Dealer's premises with or without legal process,
but without force, and to take possession and remove the Collateral. At
BCI's request and to the extent Dealer may lawfully do so, Dealer will
assemble, prepare for removal and make available to BCI at a place to be
designated by BCI which is reasonably convenient to both parties such items
of Collateral as BCI may deem sufficient to cover all of Dealer's
obligations to BCI. Dealer agrees that private sale of any item financed by
BCI at the amount owned to BCI on that item, less a reasonable restocking
charge shall be a commercially reasonable method of disposition. Five (5)
days written notice of public sale date or the date after which a private
sale may occur shall be a reasonable notice. BCI shall not be chargeable
with responsibility for the accuracy or validity
2
<PAGE>
any document or for the existence or value of any Collateral. Dealer
further agrees to pay reasonable attorney's fees and legal expenses
incurred by BCI in enforcing this Agreement after default by Dealer. To the
extent not prohibited by law, Dealer waives all valuation and exemption
laws and releases all right of appeal after payment in full.
9. TIME AND ACKNOWLEDGEMENT: Time is of the essence in the performance of
Dealer's duties, but the failure of BCI to enforce it rights under this
Agreement shall not be deemed a waiver of BCI's rights under this
Agreement. Dealer will not assert against BCI any claim or defense Dealer
may have against any seller of goods to Dealer. Dealer acknowledges receipt
of a copy of this Agreement.
10. ASSIGNMENT: This Agreement may be assigned by BCI but Dealer may not assign
this Agreement without the prior written consent of BCI.
11. MODIFICATION: This Agreement may not be modified, altered or amended in any
manner whatsoever, except by a further agreement in writing signed by both
Dealer and BCI.
12. GOVERNING LAW: The validity, enforceability and interpretation of this
Agreement shall be governed by the laws of the State of New York.
13. DEALER BUSINESS AND WAREHOUSE ADDRESSES:
(Attached a schedule if more space required)
1201 East Highway 80
Albilene TX 79605
[SEAL]
Effective as of the ________ day of _________________, 19______.
DEALER:
Falcon Marine Abilene, Inc.
------------------------------------
WITNESS: Type or print name of Dealer
(OR ATTEST)
By: /s/ Mark Walton
---------------------------------
/s/ Kathy Dela Rosa
- ---------------------------------
Name: Mark Walton
-------------------------------
[SIGNATURE ILLEGIBLE] (SEAL) Title: President
- --------------------------------- ------------------------------
Asst. Secretary
Accepted by:
BOMBARDIER CAPITAL INC.
By ______________________________
Title ___________________________
3
<PAGE>
ACKNOWLEDGEMENT BY DEALER IF INDIVIDUAL(S) OR PARTNERSHIP
STATE OF
COUNTY OF
On this the 30th day of November, 1993, before me personally appeared
_________________________ known to me to be the person(s) whose name(s) is (are)
subscribed to the foregoing Inventory Security Agreement and Power of Attorney
and acknowledged that he (they) voluntarily executed the same for the purposes
therein contained.
In Witness Whereof I Hereunto set my hand and Official Seal.
_______________
Notary Public
ACKNOWLEDGEMENT BY DEALER IF A CORPORATION
STATE OF
COUNTY OF
On this the 30th day of November, 1993, before me personally appeared MARK
WALTON who acknowledged himself to be the PRESIDENT of FALCON MARIE ABILENE,
INC., a corporation, and that he, being authorized by the Board of Directors,
voluntarily executed the foregoing Inventory Security Agreement and Power of
Attorney for the purposes therein contained, by signing the name of the
corporation by himself.
In Witness Whereof I Hereunto set my hand and Official Seal
[SIGNATURE ILLEGIBLE]
-----------------------------------
Notary Public
4
<PAGE>
EXHIBIT 10.6(a)
AGREEMENT FOR WHOLESALE FINANCING
This Agreement for Wholesale Financing ("Agreement") is made as of __________,
1995 between Deutsche Financial Services Corporation ("DFS") and Travis Boating
Center, Arlington, Inc. 1725 W. Division, Arlington, Texas, 76012, Travis Boats
& Motors, Inc. 13045 Research, Austin, Texas 78750, Travis Snowden Marine, Inc.,
2620 N. I-36, Carrollton, Texas, Falcon Marine Abilene, Inc., 1021 E. Hwy 80,
Abilene, Texas, 79601, Falcon Marine, Inc. 1920 N. Loop 250 W., Midland, Texas,
79707, and Travis Boating Center Beaumont, Inc., 2949 College St., Beaumont,
Texas, 77701 (individually and collectively referred to as "Dealer").
1. EXTENSION OF CREDIT. Each Dealer is an affiliated company of each other.
All Dealers do business between and among each other and with third
parties as an integrated family of companies, and accordingly desire to
have the availability of one common credit facility instead of separate
credit facilities, and each Dealer has requested that DFS extend such a
common credit facility. Each Dealer acknowledges that DFS will be lending
against, and relying on a lien upon, the Collateral described in Section 3
of this Agreement even though the proceeds of any particular loan made
hereunder may not be advanced directly to such Dealer, and that such Dealer
will nevertheless benefit by the making of all such loans by DFS and the
availability of a single credit facility of a size greater than each could
independently warrant. Subject to the terms of this Agreement, DFS may
extend credit to Dealer from time to time to purchase inventory from DFS
approved vendors ("Vendors") and for other purposes. If DFS advances funds
to Dealer following Dealer's execution of this Agreement, DFS will be
deemed to have entered into this Agreement with Dealer, whether or not
executed by DFS. DFS' decision to advance funds will not be binding until
the funds are actually advanced. DFS may combine all of DFS' advances to
any Dealer or on such Dealer's behalf, whether under this Agreement or any
other agreement, and whether provided by one or more of DFS' branch
offices, together with all finance charges, fees and expenses related
thereto, to make one debt owed by such Dealer. DFS may, at any time and
without notice to Dealer, elect not to finance any inventory sold by
particular Vendors who are in default of their obligations to DFS, or with
respect to which DFS reasonably feels insecure. This is an agreement
regarding the extension of credit, and not the provision of goods or
services.
2. FINANCING TERMS AND STATEMENTS OF TRANSACTION. Dealer and DFS agree that
certain financial terms of any advance made by DFS under this Agreement,
whether regarding finance charges, other fees, maturities, curtailments or
other financial terms, are not set forth herein because such terms depend,
in part, upon the availability of Vendor discounts, payment terms or other
incentives, prevailing economic conditions, DFS' floorplanning volume with
Dealer and with Dealer's Vendors, and other economic factors which may vary
over time. Dealer and DFS further agree that it is therefore in their
mutual best interest to set forth in this Agreement only the general terms
of Dealer's financing arrangement with DFS. Upon agreeing to finance a
particular item of inventory for Dealer, DFS will send Dealer a
Statement of Transaction identifying such inventory and the applicable
financial terms. Unless Dealer notifies DFS in writing of any objection
within fifteen (15) days after a Statement of
<PAGE>
Transaction is mailed to Dealer: (a) the amount shown on such Statement of
Transaction will be an account stated; (b) Dealer will have agreed to all
rates, charges and other terms shown on such Statement of Transaction; (c)
Dealer will have agreed that DFS is financing the items of inventory
referenced in such Statement of Transaction at Dealer's request; and (d)
such Statement of Transaction will be incorporated herein by reference,
will be made a part hereof as if originally set forth herein, and will
constitute an addendum hereto. If Dealer objects to the terms of any
Statement of Transaction, Dealer agrees to pay DFS for such inventory in
accordance with the most recent terms for similar inventory to which Dealer
has not objected (or, if there are no prior terms, at the lesser of 16% per
annum or at the maximum lawful contract rate of interest permitted under
applicable law), but Dealer acknowledges that DFS may then elect to
terminate Dealer's financing program pursuant to Section 18, and cease
----------
making additional advances to Dealer. However, such termination will not
accelerate the maturities of advances previously made, unless Dealer shall
otherwise be in default of this Agreement.
3. GRANT OF SECURITY INTEREST. To secure payment of all of Dealer's current
and future debts to DFS, whether under this Agreement or any current or
future guaranty or other agreement, Dealer grants to DFS a security
interest in all of its: (a) inventory and equipment which is manufactured
or sold by Outboard Marine Corporation or any of its affiliates and which
bears any trademark or trade name of Johnson, whether now owned or
hereafter acquired, and all attachments, accessories, accessions, returns,
repossessions, exchanges, substitutions and replacements thereto and all
proceeds thereof; and (b) all inventory and equipment, financed by DFS,
whether now owned or hereafter acquired, and all attachments, accessories,
accessions, returns, repossessions, exchanges, substitutions and
replacements thereto, and all proceeds thereof. All of such assets are
collectively referred to herein as the "Collateral." All of such terms for
which meanings are provided in the Uniform Commercial Code of the
applicable state are used herein with such meanings. All Collateral
financed by DFS, and all proceeds thereof, will be held in trust by Dealer
for DFS, with such proceeds being payable in accordance with Section 9.
---------
4. AFFIRMATIVE WARRANTIES AND REPRESENTATIONS. Dealer warrants and represents
to DFS that: (a) Dealer has good title to all Collateral; (b) DFS' security
interest in the Collateral financed by DFS is not now and will not become
subordinate to the security interest, lien, encumbrance or claim of any
person; (c) Dealer will execute all documents DFS requests to perfect and
maintain DFS' security interest in the Collateral; (d) Upon a default
pursuant to Section 13 herein, Dealer will deliver to DFS immediately upon
each request, and DFS may retain, each Certificate of Title or Statement of
Origin issued for Collateral financed by DFS; (e) Dealer will at all times
be duly organized, existing, in good standing, qualified and licensed to do
business in each state, county, or parish, in which the nature of its
business or property so requires; (f) Dealer has the right and is duly
authorized to enter into this Agreement; (g) Dealer's execution of this
Agreement does not constitute a breach of any agreement to which Dealer is
now or hereafter becomes bound; (h) there are and will be no actions or
proceedings pending or threatened against Dealer which might result in any
material adverse change in Dealer's financial or business condition or
which might in any way adversely affect any of Dealer's assets;
-2-
<PAGE>
(i) Dealer will maintain the Collateral in good condition and repair; (j)
Dealer has duly filed and will duly file all tax returns required by law;
(k) Dealer has paid and will pay when due all taxes, levies, assessments
and governmental charges of any nature; (1) Dealer will keep and maintain
all of their books and records pertaining to the Collateral at their
principal places of business designated in this Agreement; (m) Dealer will
promptly supply DFS with such information concerning it or any guarantor as
DFS hereafter may reasonably request; (n) all Collateral will be kept at
Dealer's principal place of business listed above, and such other
locations, if any, of which Dealer has notified DFS in writing or as listed
on any current or future Exhibit "A" attached hereto which written
notice(s) to DFS and Exhibit A(s) are incorporated herein by reference; (o)
Dealer will give DFS thirty (30) days prior written notice of any change in
Dealer's identity, name, form of business organization, ownership,
management, principal place of business, Collateral locations or other
business locations, and before moving any books and records to any other
location; (p) Dealer will observe and perform all matters required by any
lease, license, concession or franchise forming part of the Collateral in
order to maintain all the rights of DFS thereunder; (q) Dealer will advise
DFS of the commencement of any material legal proceeding against Dealer or
any guarantor; and (r) Dealer will comply with all applicable laws and will
conduct its business in a manner which preserves and protects the
Collateral and the earnings and incomes thereof.
5. NEGATIVE COVENANTS. Dealer will not at any time (without DFS' prior
written consent): (a) other than in the ordinary course of its business,
sell, lease or otherwise dispose of or transfer any of its assets;
(b) rent, lease, consign, or use any Collateral financed by DFS; or
(c) merge or consolidate with another entity.
6. INSURANCE. Dealer will immediately notify DFS of any material loss, theft
or damage to any Collateral. Dealer will keep the Collateral insured for
its full insurable value under an "all risk" property insurance policy with
a company acceptable to DFS, naming DFS as a lender loss-payee or mortgagee
and containing standard lender's loss payable and termination provisions.
Dealer will provide DFS with written evidence of such property insurance
coverage and lender's loss-payee or mortgagee endorsement.
7. FINANCIAL STATEMENTS. Dealer will deliver to DFS: (a) within ninety (90)
days after the end of each of Dealer's fiscal years, a reasonably detailed
balance sheet as of the last day of such fiscal year and a reasonably
detailed income statement covering Dealer's operations for such fiscal
year, in a form satisfactory to DFS; (b) within forty-five (45) days after
the end of each of Dealer's fiscal quarters, a reasonably detailed balance
sheet as of the last day of such quarter and an income statement covering
Dealer's operations for such quarter, in a form satisfactory to DFS; and
(c) within ten (10) days after request therefor by DFS, any other report
requested by DFS relating to the Collateral or the financial condition of
Dealer. Dealer warrants and represents to DFS that all financial statements
and information relating to Dealer or any guarantor which have been or may
hereafter be delivered by Dealer or any guarantor are true and correct and
have been and will be prepared in accordance with generally accepted
accounting principles consistently applied and, with respect to such
previously delivered statements or
-3-
<PAGE>
information, there has been no material adverse change in the financial or
business condition of Dealer or any guarantor since the submission to DFS,
either as of the date of delivery, or, if different, the date specified
therein, and Dealer acknowledges DFS' reliance thereon.
8. REVIEWS. Dealer grants DFS an irrevocable license to enter Dealer's
business locations during normal business hours without notice to Dealer
to: (a) account for and inspect all Collateral; (b) verify Dealer's
compliance with this Agreement; and (c) examine and copy Dealer's books and
records related to the Collateral.
9. PAYMENT TERMS. Dealer will immediately pay DFS the principal indebtedness
owed DFS on each item of Collateral financed by DFS (as shown on the
Statement of Transaction identifying such Collateral) on the earliest
occurrence of any of the following events: (a) when such Collateral is
lost, stolen or damaged; (b) for Collateral financed under Pay-As-Sold
("PAS") terms (as shown on the Statement of Transaction identifying such
Collateral), when such Collateral is sold, transferred, rented, leased,
otherwise disposed of or matured; (c) in strict accordance with any
curtailment schedule for such Collateral (as shown on the Statement of
Transaction identifying such Collateral); (d) for Collateral financed under
Scheduled Payment Program ("SPP") terms (as shown on the Statement of
Transaction identifying such Collateral), in strict accordan ce with the
installment payment schedule; and (e) when otherwise required under the
terms of any financing program agreed to in writing by the parties.
Regardless of the SPP terms pertaining to any Collateral financed by DFS,
if DFS determines that the current outstanding debt which Dealer owes to
DFS exceeds the aggregate wholesale invoice price of such Collateral in
Dealer's possession, Dealer will immediately upon demand pay DFS the
difference between such outstanding debt and the aggregate wholesale
invoice price of such Collateral. If Dealer from time to time is required
to make immediate payment to DFS of any past due obligation discovered
during any Collateral audit, or at any other time, Dealer agrees that
acceptance of such payment by DFS shall not be construed to have waived or
amended the terms of its financing program. The proceeds of any Collateral
received by Dealer will be held by Dealer in trust for DFS' benefit, for
application as provided in this Agreement. Dealer will send all payments to
DFS' branch office(s) responsible for Dealer's account. DFS may apply: (i)
payments to reduce finance charges first and then principal, regardless of
Dealer's instructions; and (ii) principal payments to the oldest (earliest)
invoice for Collateral financed by DFS, but, in any event, all principal
payments will first be applied to such Collateral which is sold, lost,
stolen, damaged, rented, leased, or otherwise disposed of or unaccounted
for. Any third party discount, rebate, bonus or credit granted to Dealer
for any Collateral will not reduce the debt Dealer owes DFS until DFS has
received payment therefor in cash. Dealer will: (1) pay DFS even if any
Collateral is defective or fails to conform to any warranties extended by
any third party; (2) not assert against DFS any claim or defense Dealer has
against any third party; and (3) Provided that Dealer has sold the
Collateral, indemnify and hold DFS harmless against all claims and defenses
asserted by any buyer of the Collateral relating to the condition of, or
any representations regarding, any of the Collateral. Dealer waives all
rights of offset and counterclaims Dealer may have against DFS.
-4-
<PAGE>
10. CALCULATION OF CHARGES. Dealer will pay finance charges to DFS on the
outstanding principal debt which Dealer owes DFS for each item of
Collateral financed by DFS at the rate(s) shown on the Statement of
Transaction identifying su6h Collateral, unless Dealer objects thereto as
provided in Section 2. The finance charges attributable to the rate shown
---------
on the Statement of Transaction will: (a) be computed based on a 360 day
year; (b) be calculated by multiplying the Daily Charge (as defined below)
by the actual number of days in the applicable billing period; and (c)
accrue from the invoice date of the Collateral identified on such Statement
of Transaction until DFS receives full payment in good funds of the
principal debt Dealer owes DFS for each item of such Collateral in
accordance with DFS' payment recognition policy and DFS applies such
payment to Dealer's principal debt in accordance with the terms of this
Agreement. The "Daily Charge" is the product of the Daily Rate (as defined
below) multiplied by the Average Daily Balance (as defined below). The
"Daily Rate" is the quotient of the annual rate shown on the Statement of
Transaction divided by 360, or the monthly rate shown on the Statement of
Transaction divided by 30. The "Average Daily Balance" is the quotient of
(i) the sum of the outstanding principal debt owed DFS on each day of a
billing period for each item of Collateral identified on a Statement of
Transaction, divided by (ii) the actual number of days in such billing
period. Dealer will also pay DFS $100 for each check returned unpaid for
insufficient funds (an "NSF check") (such $100 payment repays DFS'
estimated administrative costs; it does not waive the default caused by the
NSF check). The annual percentage rate of the finance charges relating to
any item of Collateral financed by DFS will be calculated from the
invoice, date of such Collateral, regardless of any period during which any
finance charge subsidy shall be paid or payable by any third party. Dealer
acknowledges that DFS intends to strictly conform to the applicable usury
laws governing this Agreement. Regardless of any provision contained herein
or in any other document executed or delivered in connection herewith or
therewith, DFS shall never be deemed to have contracted for, charged or be
entitled to receive, collect or apply as interest on this Agreement
(whether termed interest herein or deemed to be interest by judicial
determination or operation of law), any amount in excess of the maximum
amount allowed by applicable law, and, if DFS ever receives, collects or
applies as interest any such excess, such amount which would be excessive
interest will be applied first to the reduction of the unpaid principal
balances of advances under this Agreement, and, second, any remaining
excess will be paid to Dealer. In determining whether or not the interest
paid or payable under any specific contingency exceeds the highest lawful
rate, Dealer and DFS shall, to the maximum extent permitted under
applicable law: (A) characterize any non-principal payment (other than
payments which are expressly designated as interest payments hereunder) as
an expense or fee rather than as interest; (B) exclude voluntary pre-
payments and the effect thereof; and (C) spread the total amount of
interest throughout the entire term of this Agreement so that the interest
rate is uniform throughout such term.
11. BILLING STATEMENT. DFS will send Dealer a monthly billing statement
identifying all charges due on Dealer's account with DFS. The charges
specified on each billing statement will be: (a) due and payable in full
immediately on receipt; and (b) an account stated, unless DFS receives
Dealer's written objection thereto within 15 days after it is mailed to
Dealer. If DFS does not receive, by the 25th day of any given month,
-5-
<PAGE>
payment of all charges accrued to Dealer's account with DFS during the
immediately preceding month, Dealer will (to the extent allowed by law) pay
DFS a late fee ("Late Fee") equal to the greater of $5 or 5% of the amount
of such finance charges (payment of the Late Fee does not waive the default
caused by the late payment). DFS may adjust the billing statement at any
time to conform to applicable law and this Agreement.
12. JOINT AND SEVERAL LIABILITY. Each Dealer will be jointly and severally
liable with each other Dealer for the liabilities and obligations of each
other Dealer hereunder, each Dealer will be obligated and responsible for
the performance of each other Dealer under this Agreement, and a default by
any Dealer will be a default by each other Dealer. Each Dealer waives: (a)
any right of contribution from any other Dealer until all of the
liabilities and obligations of Dealers pursuant to this Agreement have been
paid in full; (b) any right to require DFS to institute any action or suit
or to exhaust DFS' rights and remedies against any Collateral or any Dealer
before proceeding against such Dealer; and, (c) any obligation of DFS to
marshal any assets in favor of any Dealer. Each Dealer consents that DFS
may, without in any manner affecting such Dealer's joint and several
liability for any liabilities and obligations to DFS: (i) extend in whole
or in part (by renewal or otherwise), modify, accelerate, change or release
any obligation of any other Dealer; (ii) sell, release, surrender, modify,
impair, exchange, substitute or,extend the duration or the time for the
performance or payment of any and all Collateral or other property, of any
nature and from whomsoever received, held by DFS as security for the
payment or performance of any liabilities and obligations to DFS of any
Dealer; and (iii) settle, adjust or compromise any of DFS' claims against
such Dealer.
13. DEFAULT. Dealer will be in default under this Agreement if: (a) Dealer
breaches any terms, warranties or representations contained herein, in any
Statement of Transaction to which Dealer has not objected as provided in
Section 2, or in any other agreement between DFS and Dealer; (b) any
---------
guarantor of Dealer's debts to DFS breaches any terms, warranties or
representations contained in any guaranty or other agreement between the
guarantor and DFS; (c) any representation, statement, report or certificate
made or delivered by Dealer or any guarantor to DFS is not accurate when
made; (d) Dealer fails to pay any portion of Dealer's debts to DFS when due
and payable hereunder or under any other agreement between DFS and Dealer;
(e) Dealer abandons any Collateral; (f) Dealer or any guarantor is or
becomes in default in the payment of any debt owed to any third party; (g)
a money judgment issues against Dealer or any guarantor; (h) an attachment,
sale or seizure issues or is executed against any assets of Dealer or of
any guarantor; provided that such judgement, attachment, sale or seizure is
in excess of $100,000.00; (i) the undersigned dies while Dealer's business
is operated as a sole proprietorship, any general partner dies while
Dealer's business is operated as a general or limited partnership, or any
member dies while Dealer's business is operated as a limited liability
company, as applicable; (j) any guarantor dies; (k) Dealer or any guarantor
shall cease existence as a corporation, partnership, limited liability
company or trust, as applicable; (1) Dealer or any guarantor ceases or
suspends business; (m) Dealer, any guarantor or any member while Dealer's
business is operated as a limited liability company, as applicable, makes a
general assignment for the benefit of creditors; (n) Dealer, any guarantor
or any member while Dealer's business is operated as a limited
-6-
<PAGE>
liability company, as applicable, becomes insolvent or voluntarily or
involuntarily becomes subject to the Federal Bankruptcy Code, any state
insolvency law or any similar law; (o) any receiver is appointed for any
assets of Dealer, any guarantor or any member while Dealer's business is
operated as a limited liability company, as applicable; (p) any guaranty of
Dealer's debts to DFS is terminated; (q) Dealer or any guarantor
misrepresents Dealer's or such guarantor's financial condition or
organizational structure; or (r) DFS determines in good faith that it is
insecure with respect to any of the Collateral or the payment of any part
of Dealer's obligation to DFS.
14. RIGHTS OF DFS UPON DEFAULT. In the event of a default which Dealer has
failed to cure in full within five (5) days from the date of receipt of
notice of such default from DFS:
(a) DFS may, at any time at DFS' election, do any one or more of the
following: declare all or any part of the debt Dealer owes DFS
immediately due and payable, together with all costs and expenses of
DFS' collection activity, including, without limitation, all
reasonable attorneys' fees; exercise any or all rights under
applicable law (including, without limitation, the right to possess,
transfer and dispose of the Collateral); and/or cease extending any
additional credit to Dealer (DFS' right to cease extending credit
shall not be construed to limit the discretionary nature of this
credit facility).
(b) Dealer will segregate and keep the Collateral in trust for DFS, and in
good order and repair, and will not sell, rent, lease, consign,
otherwise dispose of or use any Collateral, nor further encumber any
Collateral.
(c) Upon DFS' oral or written demand, Dealer will immediately deliver the
Collateral to DFS, in good order and repair, at a reasonable place
specified by DFS, together with all related documents; or DFS may, in
DFS' sole discretion and without notice or demand to Dealer, take
immediate possession of the Collateral together with all related
documents.
(d) DFS may, without notice, apply a default finance charge to Dealer's
outstanding principal indebtedness equal to the default rate specified
in Dealer's financing program with DFS, if any, or if there is none so
specified, at the lesser of 3% per annum above the rate in effect
immediately prior to the default, or the highest lawful contract rate
of interest permitted under applicable law.
All of DFS' rights and remedies are cumulative. DFS' failure to
exercise any of DFS' rights or remedies hereunder will not waive any
of DFS' rights or remedies as to any past, current or future default.
15. SALE OF COLLATERAL. Dealer agrees that if DFS conducts a private sale of
any Collateral by requesting bids from 10 or more dealers or distributors
in that type of Collateral, any sale by DFS of such Collateral in bulk or
in parcels within 120 days of: (a) DFS' taking possession and control of
such Collateral; or (b) when DFS is otherwise authorized to sell such
Collateral; whichever occurs last, to the bidder submitting the highest
cash bid therefor, is a commercially reasonable sale of such Collateral
under the Uniform Commercial Code; provided that
-7-
<PAGE>
the Collateral is sold "as is-where is". Dealer agrees that the purchase of
any Collateral by a Vendor, as provided in any agreement between DFS and
the Vendor, is a commercially reasonable disposition and private sale of
such Collateral under the Uniform Commercial Code, and no request for bids
shall be required. Dealer further agrees that 7 or more days prior written
notice will be commercially reasonable notice of any public or private sale
(including any sale to a Vendor). Dealer irrevocably waives any requirement
that DFS retain possession and not dispose of any Collateral until after an
arbitration hearing, arbitration award, confirmation, trial or final
judgment. If DFS disposes of any such Collateral other than as herein
contemplated, the commercial reasonableness of such disposition will be
determined in accordance with the laws of the state governing this
Agreement.
16. POWER OF ATTORNEY. Dealer grants DFS an irrevocable power of attorney to:
execute or endorse on Dealer's behalf any checks, financing statements,
instruments, Certificates of Title and Statements of Origin pertaining to
the Collateral; supply any omitted information and correct errors in any
documents between DFS and Dealer; initiate and settle any insurance claim
pertaining to the Collateral; and do anything to preserve and protect the
Collateral and DFS' rights and interest therein.
17. INFORMATION. DFS may provide to any third party any credit, financial or
other information on Dealer that DFS may from time to time possess. DFS may
obtain from any Vendor any credit, financial or other information regarding
Dealer that such Vendor may from time to time possess.
18. TERMINATION. Any party may terminate this Agreement as it applies to
such party at any time by written notice received by the other party. if
DFS terminates this Agreement, Dealer agrees that if Dealer: (a) is not in
default hereunder, 30 days prior notice of termination is reasonable and
sufficient (although this provision shall not be construed to mean that
shorter periods may not, in particular circumstances, also be reasonable
and sufficient); or (b) is in default hereunder, no prior notice of
termination is required. Dealer will not be relieved from any obligation to
DFS arising out of DFS' advances or commitments made before the effective
termination date of this Agreement. DFS will retain all of its rights,
interests and remedies hereunder until Dealer has paid all of Dealer's
debts to DFS. All waivers set forth within this Agreement will survive any
termination of this Agreement.
19. BINDING EFFECT. Dealer cannot assign its interest in this Agreement
without DFS' prior written consent, although DFS may assign or participate
DFS' interest, in whole or in part, without Dealer's consent. This
Agreement will protect and bind DFS' and Dealer's respective heirs,
representatives, successors and assigns.
20. NOTICES. Except as otherwise stated herein, all notices, arbitration
claims, responses, requests and documents will be sufficiently given or
served if mailed or delivered: (a) to Dealer at Dealer's principal place of
business specified above; and (b) to DFS at 655 Maryville Centre Drive, St.
Louis, Missouri 63141-5832, Attention: General Counsel, or such other
address as the parties may hereafter specify in writing.
-8-
<PAGE>
21. NO ORAL AGREEMENTS. ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND
CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES
TO EXTEND OR RENEW SUCH DEBTS ARE NOT ENFORCEABLE. TO PROTECT DEALER AND
DFS FROM MISUNDERSTANDING OR DISAPPOINTMENT, ALL AGREEMENTS COVERING SUCH
MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE
STATEMENT OF THE AGREEMENT BETWEEN THE PARTIES, EXCEPT AS SPECIFICALLY
PROVIDED HEREIN OR AS THE PARTIES MAY LATER AGREE IN WRITING TO MODIFY IT.
THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN,THE PARTIES.
22. OTHER WAIVERS. Dealer irrevocably waives notice of: DFS' acceptance of
this Agreement, presentment, demand, protest, nonpayment, nonperformance,
and dishonor. Dealer and DFS irrevocably waive all rights to claim any
punitive and/or exemplary damages.
23. SEVERABILITY. If any provision of this Agreement or its application is
invalid or unenforceable, the remainder of this agreement will not be
impaired or affected and will remain binding and enforceable.
24. SUPPLEMENT. If Dealer and DFS have heretofore executed other agreements in
connection with all or any part of the Collateral, this Agreement shall
supplement each and every other agreement previously executed by and
between Dealer and DFS, and in that event this Agreement shall neither be
deemed a novation nor a termination of such previously executed agreement
nor shall execution of this Agreement be deemed a satisfaction of any
obligation secured by such previously executed agreement.
25. RECEIPT OF AGREEMENT. Dealer acknowledges that it has received a true and
complete copy of this Agreement. Dealer acknowledges that it has read and
understood this Agreement. Notwithstanding anything herein to the contrary:
(a) DFS may rely on any facsimile copy, electronic data transmission or
electronic data storage of this Agreement, any Statement of Transaction,
billing statement, invoice from a Vendor, financial statements or other
reports, and (b) such facsimile copy, electronic data transmission or
electronic data storage will be deemed an original, and the best evidence
thereof for all purposes, including, without limitation, under this
Agreement or any other agreement between DFS and Dealer, and for all
evidentiary purposes before any arbitrator, court or other adjudicatory
authority.
26. SOLVENCY. The fair salable value of each of Dealer's assets realizable
within a reasonable time exceeds the total amount of liabilities (including
contingent, subordinated, unmatured and unliquidated liabilities, in
each case valued at the probable liability of such Dealer with respect
thereto) of such Dealer, and, therefore, such Dealer is not "insolvent".
The present fair salable value of the assets of such Dealer is not less
than the amount that will be required to pay its probable liabilities as
they become absolute and matured; such Dealer will be able to realize upon
its assets and will have sufficient cash flow from operations to enable it
to pay its debts, other liabilities, contingent obligations and other
commitments as they mature in the ordinary course of business; such Dealer
does not have unreasonably small capital with which to engage in its
anticipated businesses; and such Dealer has not incurred any obligation
under this Agreement or any other agreement with
-9-
<PAGE>
DFS or made any conveyance pursuant to or in connection with any thereof,
with actual intent to hinder, delay or defraud either present or future
creditors of such Dealer. In the case of each Dealer, such Dealer has
assumed for purposes of this representation the enforceability and the
collectibility of its subrogation and contribution rights against each of
the other Dealers upon full payment of the liabilities and obligations owed
to DFS pursuant to this Agreement.
27. MISCELLANEOUS. Time is of the essence regarding Dealer's performance of
its obligations to DFS notwithstanding any course of dealing or custom on
DFS' part to grant extensions of time. Dealer's liability under this
Agreement is direct and unconditional and will not be affected by the
release or nonperfection of any security interest granted hereunder. DFS
will have the right to refrain from or postpone enforcement of this
Agreement or any other agreements between DFS and Dealer without prejudice
and the failure to strictly enforce these agreements will not be construed
as having created a course of dealing between DFS and Dealer contrary to
the specific terms of the agreements or as having modified, released or
waived the same. The express terms of this Agreement will not be modified
by any course of dealing, usage of trade, or custom of trade which may
deviate from the terms hereof. If Dealer fails to pay any taxes, fees or
other obligations which may impair DFS' interest in the Collateral, or
fails to keep the Collateral insured, DFS may, but shall not be required
to, pay such taxes, fees or obligations and pay the cost to insure the
Collateral, and the amounts paid will be: (a) an additional debt owed by
Dealer to DFS, which shall be subject to finance charges as provided
herein; and (b) due and payable immediatedly in full. Dealer agrees to pay
all of DFS' reasonable attorneys' fees and expenses incurred by DFS in
enforcing DFS' rights hereunder. The Section titles used in this Agreement
are for convenience only and do not define or limit the contents of any
Section.
28. BINDING ARBITRATION.
28.1 ARBITRABLE CLAIMS. Except as otherwise specified below, all actions,
disputes, claims and controversies under common law, statutory law or
in equity of any type or nature whatsoever (including, without
limitation, all torts, whether regarding negligence, breach of
fiduciary duty, restraint of trade, fraud, conversion, duress,
interference, wrongful replevin, wrongful sequestration, fraud in the
inducement, usury or any other tort, all contract actions, whether
regarding express or implied terms, such as implied covenants of good
faith, fair dealing, and the commercial reasonableness of any
Collateral disposition, or any other contract claim, all claims of
deceptive trade practices or lender liability, and all claims
questioning the reasonableness or lawfulness of any act), whether
arising before or after the date of this Agreement, and whether
directly or indirectly relating to: (a) this Agreement and/or any
amendments and addenda hereto, or the breach, invalidity or
termination hereof; (b) any previous or subsequent agreement between
DFS and Dealer; (c) any act committed by DFS or by any parent
company, subsidiary or affiliated company of DFS (the "DFS
Companies"), or by any employee, agent, officer or director of a DFS
Company whether or not arising within the scope and course of
employment or other contractual representation of the DFS Companies
provided that such act arises under a relationship, transaction or
dealing between DFS and Dealer;
-10-
<PAGE>
and/or (d) any other relationship, transaction or dealing between DFS
and Dealer (collectively the "Disputes"), will be subject to and
resolved by binding arbitration.
28.2 ADMINISTRATIVE BODY. All arbitration hereunder will be conducted by
the American Arbitration Association ("AAA"). If the AAA is
dissolved, disbanded or becomes subject to any state or federal
bankruptcy or insolvency proceeding, the parties will remain subject
to binding arbitration which will be conducted by a mutually
agreeable arbitral forum. The parties agree that all arbitrator(s)
selected will be attorneys with at least five (5) years secured
transactions experience. The arbitrator(s) will decide if any
inconsistency exists between the rules of any applicable arbitral
forum and the arbitration provisions contained herein. If such
inconsistency exists, the arbitration provisions contained herein
will control and supersede such rules. The site of all arbitration
proceedings will be in the Division of the Federal Judicial District
in which AAA maintains a regional office that is closest to Dealer.
28.3 DISCOVERY. Discovery permitted in any arbitration proceeding
commenced hereunder is limited as follows. No later than thirty (30)
days after the filing of a claim for arbitration, the parties will
exchange detailed statements setting forth the facts supporting the
claim(s) and all defenses to be raised during the arbitration, and a
list of all exhibits and witnesses. No later than twenty-one (21)
days prior to the arbitration hearing, the parties will exchange a
final list of all exhibits and all witnesses, including any
designation of any expert witness(es) together with a summary of
their testimony; a copy of all documents and a detailed description
of any property to be introduced at the hearing. Under no
circumstances will the use of interrogatories, requests for
admission, requests for the production of documents or the taking of
depositions be permitted. However, in the event of the designation of
any expert witness(es), the following will occur: (a) all information
and documents relied upon by the expert witness(es) will be delivered
to the opposing party, (b) the opposing party will be permitted to
depose the expert witness(es), (c) the opposing party will be
permitted to designate rebuttal expert witness(es), and (d) the
arbitration hearing will be continued to the earliest possible date
that enables the foregoing limited discovery to be accomplished.
28.4 EXEMPLARY OR PUNITIVE DAMAGES. The Arbitrator(s) will not have the
authority to award exemplary or punitive damages.
28.5 CONFIDENTIALITY OF AWARDS. All arbitration proceedings, including
testimony or evidence at hearings, will be kept confidential,
although any award or order rendered by the arbitrator(s) pursuant to
the terms of this Agreement may be entered as a judgment or order in
any state or federal court and may be confirmed within the federal
judicial district which includes the residence of the party against
whom such award or order was entered. This Agreement concerns
transactions involving commerce among the several states. The Federal
Arbitration Act, Title 9 U.S.C. Sections 1 et seq., as amended
("FAA") will govern all arbitration(s) and confirmation proceedings
hereunder.
-11-
<PAGE>
28.6 PREJUDGMENT AND PROVISIONAL REMEDIES. Nothing herein will be
construed to prevent DFS' or Dealer's use of bankruptcy,
receivership, injunction, repossession, replevin, claim and delivery,
sequestration, seizure, attachment, foreclosure, dation and/or any
other prejudgment or provisional action or remedy relating to any
Collateral for any current or future debt owed by either party to the
other. Any such action or remedy will not waive DFS' or Dealer's
right to compel arbitration of any Dispute.
28.7 ATTORNEYS' FEES. If either Dealer or DFS brings any other action for
judicial relief with respect to any Dispute (other than those set
forth in Section 26.6), the party bringing such action will be liable
------------
for and immediately pay all of the other party's costs and expenses
(including attorneys' fees) incurred to stay or dismiss such action
and remove or refer such Dispute to arbitration. If either Dealer or
DFS brings or appeals an action to vacate or modify an arbitration
award and such party does not prevail, such party will pay all costs
and expenses, including attorneys' fees, incurred by the other party
in defending such action. Additionally, if Dealer sues DFS or
institutes any arbitration claim or counterclaim against DFS in which
DFS is the prevailing party, Dealer will pay all costs and expenses
(including attorneys' fees) incurred by DFS in the course of
defending such action or proceeding.
28.8 LIMITATIONS. Any arbitration proceeding must be instituted:
(a) with respect to any Dispute for the collection of any debt owed
by either party to the other, within two (2) years after the date the
last payment was received by the instituting party; and
(b) with respect to any other Dispute, within two (2) years after
the date the incident giving rise thereto occurred, whether or not
any damage was sustained or capable of ascertainment or either party
knew of such incident. Failure to institute an arbitration proceeding
within such period will constitute an absolute bar and waiver to the
institution of any proceeding, whether arbitration or a court
proceeding, with respect to such Dispute.
28.9 SURVIVAL AFTER TERMINATION. The agreement to arbitrate will survive
the termination of this Agreement.
29. INVALIDITY/UNENFORCEABILITY OF BINDING ARBITRATION. IF THIS AGREEMENT IS
FOUND TO BE NOT SUBJECT TO ARBITRATION, ANY LEGAL PROCEEDING WITH RESPECT
TO ANY DISPUTE WILL BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A
JUDGE WITHOUT A JURY. DEALER AND DFS WAIVE ANY RIGHT TO A JURY TRIAL IN ANY
SUCH PROCEEDING.
30. GOVERNING LAW. Dealer acknowledges and agrees that this and all other
agreements between Dealer and DFS have been substantially negotiated, and
will be substantially performed, in the state of MICHIGAN. Accordingly,
--------
Dealer agrees that all Disputes will be governed by, and construed in
accordance with, the laws of such state, except to the extent inconsistent
with the provisions of the FAA which shall control and govern all
arbitration proceedings hereunder.
IN WITNESS WHEREOF, Dealer and DFS have executed this Agreement as of the
date first set forth hereinabove.
-12-
<PAGE>
THIS CONTRACT CONTAINS BINDING ARBITRATION, JURY WAIVER AND PUNITIVE DAMAGE
WAIVER PROVISIONS.
TRAVIS BOATING CENTER ARLINGTON, INC.
DEUTGCHE-FINANCIAL SERVICES CORPORATION
By: [SINNATURE ILLEGIBLE] By: /s/ Mark Walton
------------------------------------ ----------------------------------
Print Name: [SINNATURE ILLEGIBLE] Print Name: Mark Walton
---------------------------- --------------------------
Title: Regional Branch Manager Title: President
--------------------------------- -------------------------------
ATTEST:
/s/ Michael B. Perrine
-------------------------------------
(Assistant) Secretary
Print Name: Michael B. Perrine
--------------------------
FALCON MARINE ABILENE, INC. TRAVIS SNOWDEN MARINE, INC.
By: /s/ Mark Walton By: /s/ Mark Walton
---------------------------------- ----------------------------------
Print Name: Mark Walton Print Name: Mark Walton
-------------------------- --------------------------
Title: President Title: President
------------------------------- -------------------------------
ATTEST: ATTEST:
/s/ Michael B. Perrine /s/ Michael B. Perrine
- ------------------------------------- -------------------------------------
(Assistant) Secretary (Assistant) Secretary
Print Name: Michael B. Perrine Print Name: Michael B. Perrine
-------------------------- --------------------------
TRAVIS BOATING CENTER BEAUMONT, INC. TRAVIS BOATING CENTER, ARLINGTON, INC.
By: /s/ Mark Walton By: /s/ Mark Walton
---------------------------------- ----------------------------------
Print Name: Mark Walton Print Name: Mark Walton
-------------------------- --------------------------
Title: President Title: President
------------------------------- -------------------------------
ATTEST: ATTEST:
/s/ Michael B. Perrine /s/ Michael B. Perrine
- ------------------------------------- -------------------------------------
(Assistant Secretary) (Assistant) Secretary
Print Name: Michael B. Perrine Print Name: Michael B. Perrine
-------------------------- --------------------------
FALCON MARINE, INC. TRAVIS BOATS & MOTORS, INC.
By: /s/ Mark Walton By: /s/ Mark Walton
---------------------------------- ----------------------------------
Print Name: Mark Walton Print Name: Mark Walton
-------------------------- --------------------------
Title: President Title: President
------------------------------- -------------------------------
ATTEST: ATTEST:
/s/ Michael B. Perrine /s/ Michael B. Perrine
- ------------------------------------- -------------------------------------
(Assistant Secretary) (Assistant/Secretary)
Print Name: Michael B. Perrine Print Name: Michael B. Perrine
-------------------------- --------------------------
-13-
<PAGE>
SECRETARY'S CERTIFICATE OF RESOLUTION
I certify that I am the Secretary or Assistant Secretary of the corporation
named below, and that the following completely and accurately sets forth certain
resolutions of the Board of Directors of the corporation adopted at a special
meeting thereof held on due notice (and with shareholder approval, if required
by law), at which meeting there was present a quorum authorized to transact the
business described below, and that the proceedings of the meeting were in
accordance with the certificate of incorporation, charter and by-laws of the
corporation, and that they have not been revoked, annulled or amended in any
manner whatsoever.
Upon motion duly made and seconded, the following resolution was
unanimously adopted after full discussion:
"RESOLVED, That the several officers, directors, and agents of this
corporation, or any one or more of them, are hereby authorized and empowered on
behalf of this corporation: to obtain financing from Deutsche Financial Services
Corporation ("DFS"), in such amounts and on such terms as such officers,
directors or agents deem proper; to enter into financing, security, pledge and
other agreements with DFS relating to the terms upon which such financing may be
obtained and security and/or other credit support is to be furnished by this
corporation therefor; from time to time to supplement or amend any such
agreements; and from time to time to pledge, assign, mortgage, grant security
interests, and otherwise transfer, to DFS as collateral security for any
obligations of this corporation to DFS, whenever and however arising, any assets
of this corporation, whether now owned or hereafter acquired; the Board of
Directors hereby ratifying, approving and confirming all that any of said
officers, directors or agents have done or may do with respect to the
foregoing."
IN WITNESS WHEREOF, I have executed and affixed the seal of the corporation
on the date stated below.
Dated: Aug 17 1995 /s/ Michael B. Perrine
----------------, -------------------------------------
(Assistant) Secretary
FALCON MARINE ABILENE, INC.
-------------------------------------
Corporate Name
(NO SEAL)
-14-
<PAGE>
SECRETARY'S CERTIFICATE OF RESOLUTION
I certify that I am the Secretary or Assistant Secretary of the corporation
named below, and that the following completely and accurately sets forth certain
resolutions of the Board of Directors of the corporation adopted at a special
meeting thereof held on due notice (and with shareholder approval, if required
by law), at which meeting there was present a quorum authorized to transact the
business described below, and that the proceedings of the meeting were in
accordance with the certificate of incorporation, charter and by-laws of the
corporation, and that they have not been revoked, annulled or amended in any
manner whatsoever.
Upon motion duly made and seconded, the following resolution was
unanimously adopted after full discussion:
"RESOLVED, That the several officers, directors, and agents of this
corporation, or any one or more of them, are hereby authorized and empowered on
behalf of this corporation: to obtain financing from Deutsche Financial Services
Corporation ("DFS"), in such amounts and on such terms as such officers,
directors or agents deem proper; to enter into financing, security, pledge and
other agreements with DFS relating to the terms upon which such financing may be
obtained and security and/or other credit support is to be furnished by this
corporation therefor; from time to time to supplement or amend any such
agreements; and from time to time to pledge, assign, mortgage, grant security
interests, and otherwise transfer, to DFS as collateral security for any
obligations of this corporation to DFS, whenever and however arising, any assets
of this corporation, whether now owned or hereafter acquired; the Board of
Directors hereby ratifying, approving and confirming all that any of said
officers, directors or agents have done or may do with respect to the
foregoing."
IN WITNESS WHEREOF, I have executed and affixed the seal of the corporation
on the date stated below.
Dated: Aug 17 1995 /s/ Michael B. Perrine
----------------, -------------------------------------
(Assistant) Secretary
Travis Boating Center Beaumont, Inc.
-------------------------------------
Corporate Name
(NO SEAL)
-15-
<PAGE>
SECRETARY'S CERTIFICATE OF RESOLUTION
I certify that I am the Secretary or Assistant Secretary of the corporation
named below, and that the following completely and accurately sets forth certain
resolutions of the Board of Directors of the corporation adopted at a special
meeting thereof held on due notice (and with shareholder approval, if required
by law), at which meeting there was present a quorum authorized to transact the
business described below, and that the proceedings of the meeting were in
accordance with the certificate of incorporation, charter and by-laws of the
corporation, and that they have not been revoked, annulled or amended in any
manner whatsoever.
Upon motion duly made and seconded, the following resolution was
unanimously adopted after full discussion:
"RESOLVED, That the several officers, directors, and agents of this
corporation, or any one or more of them, are hereby authorized and empowered on
behalf of this corporation: to obtain financing from Deutsche Financial Services
Corporation ("DFS"), in such amounts and on such terms as such officers,
directors or agents deem proper; to enter into financing, security, pledge and
other agreements with DFS relating to the terms upon which such financing may be
obtained and security and/or other credit support is to be furnished by this
corporation therefor; from time to time to supplement or amend any such
agreements; and from time to time to pledge, assign, mortgage, grant security
interests, and otherwise transfer, to DFS as collateral security for any
obligations of this corporation to DFS, whenever and however arising, any assets
of this corporation, whether now owned or hereafter acquired; the Board of
Directors hereby ratifying, approving and confirming all that any of said
officers, directors or agents have done or may do with respect to the
foregoing."
IN WITNESS WHEREOF, I have executed and affixed the seal of the corporation
on the date stated below.
Dated: Aug 17 1995 /s/ Michael B. Perrine
----------------, -----------------------------------
(Assistant) Secretary
Falcon Marine, Inc.
-----------------------------------
Corporate Name
(NO SEAL)
-16-
<PAGE>
SECRETARY'S CERTIFICATE OF RESOLUTION
I certify that I am the Secretary or Assistant Secretary of the corporation
named below, and that the following completely and accurately sets forth certain
resolutions of the Board of Directors of the corporation adopted at a special
meeting thereof held on due notice (and with shareholder approval, if required
by law), at which meeting there was present a quorum authorized to transact the
business described below, and that the proceedings of the meeting were in
accordance with the certificate of incorporation, charter and by-laws of the
corporation, and that they have not been revoked, annulled or amended in any
manner whatsoever.
Upon motion duly made and seconded, the following resolution was
unanimously adopted after full discussion:
"RESOLVED, That the several officers, directors, and agents of this
corporation, or any one or more of them, are hereby authorized and empowered on
behalf of this corporation: to obtain financing from Deutsche Financial Services
Corporation ("DFS"), in such amounts and on such terms as such officers,
directors or agents deem proper; to enter into financing, security, pledge and
other agreements with DFS relating to the terms upon which such financing may be
obtained and security and/or other credit support is to be furnished by this
corporation therefor; from time to time to supplement or amend any such
agreements; and from time to time to pledge, assign, mortgage, grant security
interests, and otherwise transfer, to DFS as collateral security for any
obligations of this corporation to DFS, whenever and however arising, any assets
of this corporation, whether now owned or hereafter acquired; the Board of
Directors hereby ratifying, approving and confirming all that any of said
officers, directors or agents have done or may do with respect to the
foregoing."
IN WITNESS WHEREOF, I have executed and affixed the seal of the corporation
on the date stated below.
Dated: Aug 17 1995 /s/ Michael B. Perrine
----------------, -------------------------------------
(Assistant) Secretary
Travis Boating Center Arlington, Inc.
-------------------------------------
Corporate Name
(NO SEAL)
-17-
<PAGE>
SECRETARY'S CERTIFICATE OF RESOLUTION
I certify that I am the Secretary or Assistant Secretary of the corporation
named below, and that the following completely and accurately sets forth certain
resolutions of the Board of Directors of the corporation adopted at a special
meeting thereof held on due notice (and with shareholder approval, if required
by law), at which meeting there was present a quorum authorized to transact the
business described below, and that the proceedings of the meeting were in
accordance with the certificate of incorporation, charter and by-laws of the
corporation, and that they have not been revoked, annulled or amended in any
manner whatsoever.
Upon motion duly made and seconded, the following resolution was
unanimously adopted after full discussion:
"RESOLVED, That the several officers, directors, and agents of this
corporation, or any one or more of them, are hereby authorized and empowered on
behalf of this corporation: to obtain financing from Deutsche Financial Services
Corporation ("DFS"), in such amounts and on such terms as such officers,
directors or agents deem proper; to enter into financing, security, pledge and
other agreements with DFS relating to the terms upon which such financing may be
obtained and security and/or other credit support is to be furnished by this
corporation therefor; from time to time to supplement or amend any such
agreements; and from time to time to pledge, assign, mortgage, grant security
interests, and otherwise transfer, to DFS as collateral security for any
obligations of this corporation to DFS, whenever and however arising, any assets
of this corporation, whether now owned or hereafter acquired; the Board of
Directors hereby ratifying, approving and confirming all that any of said
officers, directors or agents have done or may do with respect to the
foregoing."
IN WITNESS WHEREOF, I have executed and affixed the seal of the corporation
on the date stated below.
Dated: Aug 17 1995 /s/ Michael B. Perrine
----------------, -------------------------------------
(Assistant) Secretary
Travis Snowden Marine, Inc.
-------------------------------------
Corporate Name
(NO SEAL)
-18-
<PAGE>
SECRETARY'S CERTIFICATE OF RESOLUTION
I certify that I am the Secretary or Assistant Secretary of the corporation
named below, and that the following completely and accurately sets forth certain
resolutions of the Board of Directors of the corporation adopted at a special
meeting thereof held on due notice (and with shareholder approval, if required
by law), at which meeting there was present a quorum authorized to transact the
business described below, and that the proceedings of the meeting were in
accordance with the certificate of incorporation, charter and by-laws of the
corporation, and that they have not been revoked, annulled or amended in any
manner whatsoever.
Upon motion duly made and seconded, the following resolution was
unanimously adopted after full discussion:
"RESOLVED, That the several officers, directors, and agents of this
corporation, or any one or more of them, are hereby authorized and empowered on
behalf of this corporation: to obtain financing from Deutsche Financial Services
Corporation ("DFS"), in such amounts and on such terms as such officers,
directors or agents deem proper; to enter into financing, security, pledge and
other agreements with DFS relating to the terms upon which such financing may be
obtained and security and/or other credit support is to be furnished by this
corporation therefor; from time to time to supplement or amend any such
agreements; and from time to time to pledge, assign, mortgage, grant security
interests, and otherwise transfer, to DFS as collateral security for any
obligations of this corporation to DFS, whenever and however arising, any assets
of this corporation, whether now owned or hereafter acquired; the Board of
Directors hereby ratifying, approving and confirming all that any of said
officers, directors or agents have done or may do with respect to the
foregoing."
IN WITNESS WHEREOF, I have executed and affixed the seal of the corporation
on the date stated below.
Dated: Aug 17 1995 /s/ Michael B. Perrine
----------------, -------------------------------------
(Assistant) Secretary
Travis Boating Center Arlington, Inc.
-------------------------------------
Corporate Name
(NO SEAL)
-19-
<PAGE>
AMENDMENT TO AGREEMENT FOR WHOLESALE FINANCING
This Amendment is hereby made to the Agreement for Wholesale Financing
executed on the 17th day of August , 1995, ("Agreement") by and between Deutsche
Financial Services Corporation, Travis Boating Center, Arlington, Inc., Travis
Boats & Motors, Inc., Travis Snowden Marine, Inc., Falcon Marine Abilene, Inc.,
Falcon Marine, Inc., and Travis Boating Center Beaumont, Inc. (individually and
collectively referred to as "Dealer") to Deutsche Financial Services Corporation
("DFS").
For good and valuable consideration, DFS, and Dealer hereby agree that the
Agreement is amended to add TBC Arkansas, Inc. as a party to the Agreement. By
signing this Amendment, TBC Arkansas, Inc. agrees to be a party to the Agreement
as a Dealer, and further agrees to be bound and obligated to all of the terms of
the Agreement which includes, but is not limited to, the grant of a security
interest to DFS in all Collateral of TBC Arkansas, Inc. and to perform all of
the duties of a Dealer under the Agreement, to the same extent as if it had been
one of the original parties to the Agreement.
All other terms of the Agreement, to the extent consistent with the
foregoing, are hereby ratified and will continue to remain in full force and are
effect.
IN WITNESS WHEREOF, the authorized representatives of DFS, Dealer and TBC
Arkansas, Inc. have executed this Amendment on this 22 day of September, 1995.
TBC ARKANSAS, INC.
By: Michael B. Perrine
---------------------------
Title: CFO, TREASURER
-------------------------
ATTEST:
[SIGNATURE ILLEGIBLE]
- ---------------------------------
(Assistant Secretary)
TRAVIS BOATING CENTER, ARLINGTON, INC.
By: Michael B. Perrine
---------------------------
Title: CFO, TREASURER
-------------------------
ATTEST:
[SIGNATURE ILLEGIBLE]
- ---------------------------------
(Assistant Secretary)
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<PAGE>
TRAVIS BOATS & MOTORS, INC.
By: Michael B. Perrine
---------------------------
Title: CFO, TREASURER
-------------------------
ATTEST:
[SIGNATURE ILLEGIBLE]
- ---------------------------------
(Assistant Secretary)
TRAVIS SNOWDEN MARINE, INC.
By: Michael B. Perrine
---------------------------
Title: CFO, TREASURER
-------------------------
ATTEST:
[SIGNATURE ILLEGIBLE]
- ---------------------------------
(Assistant Secretary)
FALCON MARINE ABILENE, INC.
By: Michael B. Perrine
---------------------------
Title: CFO, TREASURER
-------------------------
ATTEST:
[SIGNATURE ILLEGIBLE]
- ---------------------------------
(Assistant Secretary)
FALCON MARINE, INC.
By: Michael B. Perrine
---------------------------
Title: CFO, TREASURER
-------------------------
ATTEST:
[SIGNATURE ILLEGIBLE]
- ---------------------------------
(Assistant Secretary)
TRAVIS BOATING CENTER BEAUMONT, INC.
By: Michael B. Perrine
---------------------------
Title: CFO, TREASURER
-------------------------
ATTEST:
[SIGNATURE ILLEGIBLE]
- ---------------------------------
(Assistant Secretary)
DEUTSCHE FINANCIAL SERVICES CORPORATION
By: ___________________________
Title: ________________________
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<PAGE>
EXHIBIT 10.6(b)
AGREEMENT FOR WHOLESALE FINANCING
This Agreement for Wholesale Financing ("Agreement") is made as of ____________,
1995 between Deutsche Business Services Corporation ("DBS") and Travis Boats &
Motors Baton Rouge, Inc., 14369 Florida Blvd., Baton Rogue, Louisiana, 70819
("Dealer").
1. EXTENSION OF CREDIT. Subject to the terms of this Agreement, DBS may
extend credit to Dealer from time to time to purchase inventory from DBS
approved vendors ("Vendors") and for other purposes. If DBS advances funds
to Dealer following Dealer's execution of this Agreement, DBS will be
deemed to have entered into this Agreement with Dealer, whether or not
executed by DBS. DBS' decision to advance funds will not be binding until
the funds are actually advanced. DBS may combine all of DBS' advances to
any Dealer or on such Dealer's behalf, whether under this Agreement or any
other agreement, and whether provided by one or more of DBS' branch
offices, together with all finance charges, fees and expenses related
thereto, to make one debt owed by such Dealer. DBS may, at any time and
without notice to Dealer, elect not to finance any inventory sold by
particular Vendors who are in default of their obligations to DBS, or with
respect to which DBS reasonably feels insecure. This is an agreement
regarding the extension of credit, and not the provision of goods or
services.
2. FINANCING TERMS AND STATEMENTS OF TRANSACTION. Dealer and DBS agree that
certain financial terms of any advance made by DBS under this Agreement,
whether regarding finance charges, other fees, maturities, curtailments or
other financial terms, are not set forth herein because such terms depend,
in part, upon the availability of Vendor discounts, payment terms or other
incentives, prevailing economic conditions, DBS' floorplanning volume with
Dealer and with Dealer's Vendors, and other economic factors which may vary
over time. Dealer and DBS further agree that it is therefore in their
mutual best interest to set forth in this Agreement only the general terms
of Dealer's financing arrangement with DBS. Upon agreeing to finance a
particular item of inventory for Dealer, DBS will send Dealer a Statement
of Transaction identifying such inventory and the applicable financial
terms. Unless Dealer notifies DBS in writing of any objection within
fifteen (15) days after a Statement of Transaction is mailed to Dealer: (a)
the amount shown on such Statement of Transaction will be an account
stated; (b) Dealer will have agreed to all rates, charges and other terms
shown on such Statement of Transaction; (c) Dealer will have agreed that
DBS is financing the items of inventory referenced in such Statement of
Transaction at Dealer's request; and (d) such Statement of Transaction will
be incorporated herein by reference, will be made a part hereof as if
originally set forth herein, and will constitute an addendum hereto. If
Dealer objects to the terms of any Statement of Transaction, Dealer agrees
to pay DBS for such inventory in accordance with the most recent terms for
similar inventory to which Dealer has not objected (or, if there are no
prior terms, at the lesser of 16% per annum or at the maximum lawful
contract rate of interest permitted under applicable law), but Dealer
acknowledges that DBS may then elect to terminate Dealer's financing
program pursuant to Section 17, and cease making additional advances to
----------
Dealer. However, such termination will not accelerate the maturities of
advances previously made, unless Dealer shall otherwise be in default of
this Agreement.
<PAGE>
3. GRANT OF SECURITY INTEREST. To secure payment of all of Dealer's current
and future debts to DBS, whether under this Agreement or any current or
future guaranty or other agreement, Dealer grants to DBS a security
interest in all of its: (a) inventory and equipment which is manufactured
or sold by Outboard Marine Corporation or any of its affiliates and which
bears any trademark or trade name of Johnson, whether now owned or
hereafter acquired, and all attachments, accessories, accessions, returns,
repossessions, exchanges, substitutions and replacements thereto and all
proceeds thereof; and (b) all inventory and equipment, financed by DBS,
whether now owned or hereafter acquired, and all attachments, accessories,
accessions, returns, repossessions, exchanges, substitutions and
replacements thereto, and all proceeds thereof. All of such assets are
collectively referred to herein as the "Collateral." All of such terms for
which meanings are provided in the Uniform Commercial Code of the
applicable state are used herein with such meanings. All Collateral
financed by DBS, and all proceeds thereof, will be held in trust by Dealer
for DBS, with such proceeds being payable in accordance with Section 9.
---------
4. AFFIRMATIVE WARRANTIES AND REPRESENTATIONS. Dealer warrants and represents
to DBS that: (a) Dealer has good title to all Collateral; (b) DBS' security
interest in the Collateral financed by DBS is not now and will not become
subordinate to the security interest, lien, encumbrance or claim of any
person; (c) Dealer will execute all documents DBS requests to perfect and
maintain DBS' security interest in the Collateral; (d) Upon a default
pursuant to Section 12 herein, Dealer will deliver to DBS immediately upon
each request, and DBS may retain, each Certificate of Title or Statement of
Origin issued for Collateral financed by DBS; (e) Dealer will at all times
be duly organized, existing, in good standing, qualified and licensed to do
business in each state, county, or parish, in which the nature of its
business or property so requires; (f) Dealer has the right and is duly
authorized to enter into this Agreement; (g) Dealer's execution of this
Agreement does not constitute a breach of any agreement to which Dealer is
now or hereafter becomes bound; (h) there are and will be no actions or
proceedings pending or threatened against Dealer which might result in any
material adverse change in Dealer's financial or business condition or
which might in any way adversely affect any of Dealer's assets; (i) Dealer
will maintain the Collateral in good condition and repair; (j) Dealer has
duly filed and will duly file all tax returns required by law; (k) Dealer
has paid and will pay when due all taxes, levies, assessments and
governmental charges of any nature; (1) Dealer will keep and maintain all
of its books and records pertaining to the Collateral at its principal
place of business designated in this Agreement; (m) Dealer will promptly
supply DBS with such information concerning it or any guarantor as DBS
hereafter may reasonably request; (n) all Collateral will be kept at
Dealer's principal place of business listed above, and such other
locations, if any, of which Dealer has notified DBS in writing or as listed
on any current or future Exhibit "A" attached hereto which written
notice(s) to DBS and Exhibit A(s) are incorporated herein by reference; (o)
Dealer will give DBS thirty (30) days prior written notice of any change in
Dealer's identity, name, form of business organization, ownership,
management, principal place of business, Collateral locations or other
business locations, and before moving any books and records to any other
location; (p) Dealer will observe and perform all matters required by any
lease, license, concession or franchise forming part of the Collateral in
order to maintain all the rights of DBS thereunder; (q) Dealer will advise
DBS of the commencement of material legal proceedings against Dealer or any
guarantor; and (r) Dealer will comply
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<PAGE>
with all applicable laws and will conduct its business in a manner which
preserves and protects the Collateral and the earnings and incomes thereof.
5. NEGATIVE COVENANTS. Dealer will not at any time (without DBS' prior
written consent): (a) other than in the ordinary course of its business,
sell, lease or otherwise dispose of or transfer any of its assets; (b)
rent, lease, demonstrate, consign, or use any Collateral financed by DBS;
or (c) merge or consolidate with another entity.
6. INSURANCE. Dealer will immediately notify DBS of any material loss, theft
or damage to any Collateral. Dealer will keep the Collateral insured for
its full insurable value under an "all risk" property insurance policy with
a company acceptable to DBS, naming DBS as a lender loss-payee or mortgagee
and containing standard lender's loss payable and termination provisions.
Dealer will provide DBS with written evidence of such property insurance
coverage and lender's loss-payee or mortgagee endorsement.
7. FINANCIAL STATEMENTS. Dealer will deliver to DBS: (a) within ninety (90)
days after the end of each of Dealer's fiscal years, a reasonably detailed
balance sheet as of the last day of such fiscal year and a reasonably
detailed income statement covering Dealer's operations for such fiscal
year, in a form satisfactory to DBS; (b) within forty-five (45) days after
the end of each of Dealer's fiscal quarters, a reasonably detailed balance
sheet as of the last day of such quarter and an income statement covering
Dealer's operations for such quarter, in a form satisfactory to DBS; and
(c) within ten (10) days after request therefor by DBS, any other report
requested by DBS relating to the Collateral or the financial condition of
Dealer. Dealer warrants and represents to DBS that all financial statements
and information relating to Dealer or any guarantor which have been or may
hereafter be delivered by Dealer or any guarantor are true and correct and
have been and will be prepared in accordance with generally accepted
accounting principles consistently applied and, with respect to such
previously delivered statements or information, there has been no material
adverse change in the financial or business condition of Dealer or any
guarantor since the submission to DBS, either as of the date of delivery,
or, if different, the date specified therein, and Dealer acknowledges DBS'
reliance thereon.
8. REVIEWS. Dealer grants DBS an irrevocable license to enter Dealer's
business locations during normal business hours without notice to Dealer
to: (a) account for and inspect all Collateral; (b) verify Dealer's
compliance with this Agreement; and (c) examine and copy Dealer's books and
records related to the Collateral.
9. PAYMENT TERMS. Dealer will immediately pay DBS the principal indebtedness
owed DBS on each item of Collateral financed by DBS (as shown on the
Statement of Transaction identifying such Collateral) on the earliest
occurrence of any of the following events: (a) when such Collateral is
lost, stolen or damaged; (b) for Collateral financed under Pay-As-Sold
("PAS") terms (as shown on the Statement of Transaction identifying such
Collateral), when such Collateral is sold, transferred, rented, leased,
otherwise disposed of or matured; (c) in strict accordance with any
curtailment schedule for such Collateral (as shown on the Statement of
Transaction identifying such Collateral); (d) for Collateral financed under
Scheduled Payment Program ("SPP") terms (as shown on the Statement of
Transaction identifying such Collateral), in
-3-
<PAGE>
strict accordance with the installment payment schedule; and (e) when
otherwise required under the terms of any financing program agreed to in
writing by the parties. Regardless of the SPP terms pertaining to any
Collateral financed by DBS, if DBS determines that the current outstanding
debt which Dealer owes to DBS exceeds the aggregate wholesale invoice price
of such Collateral in Dealer's possession, Dealer will immediately upon
demand pay DBS the difference between such outstanding debt and the
aggregate wholesale invoice price of such Collateral. If Dealer from time
to time is required to make immediate payment to DBS of any past due
obligation discovered during any Collateral audit, or at any other time,
Dealer agrees that acceptance of such payment by DBS shall not be construed
to have waived or amended the terms of its financing program. The proceeds
of any Collateral received by Dealer will be held by Dealer in trust for
DBS' benefit, for application as provided in this Agreement. Dealer will
send all payments to DBS' branch office(s) responsible for Dealer's
account. DBS may apply: (i) payments to reduce finance charges first and
then principal, regardless of Dealer's instructions; and (ii) principal
payments to the oldest (earliest) invoice for Collateral financed by DBS,
but, in any event, all principal payments will first be applied to such
Collateral which is sold, lost, stolen, damaged, rented, leased, or
otherwise disposed of or unaccounted for. Any third party discount, rebate,
bonus or credit granted to Dealer for any Collateral will not reduce the
debt Dealer owes DBS until DBS has received payment therefor in cash.
Dealer will: (1) pay DBS even if any Collateral is defective or fails to
conform to any warranties extended by any third party; (2) not assert
against DBS any claim or defense Dealer has against any third party; and
(3) Provided that Dealer has sold the Collateral, indemnify and hold DBS
harmless against all claims and defenses asserted by any buyer of the
Collateral relating to the condition of, or any representations regarding,
any of the Collateral. Dealer waives all rights of offset and counterclaims
Dealer may have against DBS.
10. CALCULATION OF CHARGES. Dealer will pay finance charges to DBS on the
outstanding principal debt which Dealer owes DBS for each item of
Collateral financed by DBS at the rate(s) shown on the Statement of
Transaction identifying such Collateral, unless Dealer objects thereto as
provided in Section 2. The finance charges attributable to the rate shown
----------
on the Statement of Transaction will: (a) be computed based on a 360 day
year; (b) be calculated by multiplying the Daily Charge (as defined below)
by the actual number of days in the applicable billing period; and (c)
accrue from the invoice date of the Collateral identified on such Statement
of Transaction until DBS receives full payment in good funds of the
principal debt Dealer owes DBS for each item of such Collateral in
accordance with DBS' payment recognition policy and DBS applies such
payment to Dealer's principal debt in accordance with the terms of this
Agreement. The "Daily Charge" is the product of the Daily Rate (as defined
below) multiplied by the Average Daily Balance (as defined below). The
"Daily Rate" is the quotient of the annual rate shown on the Statement of
Transaction divided by 360, or the monthly rate shown on the Statement of
Transaction divided by 30. The "Average Daily Balance" is the quotient of
(i) the sum of the outstanding principal debt owed DBS on each day of a
billing period for each item of Collateral identified on a Statement of
Transaction, divided by (ii) the actual number of days in such billing
period. Dealer will also pay DBS $100 for each check returned unpaid for
insufficient funds (an "NSF check") (such $100 payment repays DBS'
estimated administrative costs; it does not waive the default caused by the
NSF check). The annual percentage rate
-4-
<PAGE>
of the finance charges relating to any item of Collateral financed by DBS
will be calculated from the invoice date of such Collateral, regardless of
any period during which any finance charge subsidy shall be paid or payable
by any third party. Dealer acknowledges that DBS intends to strictly
conform to the applicable usury laws governing this Agreement. Regardless
of any provision contained herein or in any other document executed or
delivered in connection herewith or therewith, DBS shall never be deemed to
have contracted for, charged or be entitled to receive, collect or apply as
interest on this Agreement (whether termed interest herein or deemed to be
interest by judicial determination or operation of law), any amount in
excess of the maximum amount allowed by applicable law, and, if DBS ever
receives, collects or applies as interest any such excess, such amount
which would be excessive interest will be applied first to the reduction of
the unpaid principal balances of advances under this Agreement, and,
second, any remaining excess will be paid to Dealer. In determining whether
or not the interest paid or payable under any specific contingency exceeds
the highest lawful rate, Dealer and DBS shall, to the maximum extent
permitted under applicable law: (A) characterize any non-principal payment
(other than payments which are expressly designated as interest payments
hereunder) as an expense or fee rather than as interest; (B) exclude
voluntary pre-payments and the effect thereof; and (C) spread the total
amount of interest throughout the entire term of this Agreement so that the
interest rate is uniform throughout such term.
11. BILLING STATEMENT. DBS will send Dealer a monthly billing statement
identifying all charges due on Dealer's account with DBS. The charges
specified on each billing statement will be: (a) due and payable in full
immediately on receipt; and (b) an account stated, unless DBS receives
Dealer's written objection thereto within 15 days after it is mailed to
Dealer. If DBS does not receive, by the 25th day of any given month,
payment of all charges accrued to Dealer's account with DBS during the
immediately preceding month, Dealer will (to the extent allowed by law) pay
DBS a late fee ("Late Fee") equal to the greater of $5 or 5% of the amount
of such finance charges (payment of the Late Fee does not waive the default
caused by the late payment). DBS may adjust the billing statement at any
time to conform to applicable law and this Agreement.
12. DEFAULT. Dealer will be in default under this Agreement if: (a) Dealer
breaches any terms, warranties or representations contained herein, in any
Statement of Transaction to which Dealer has not objected as provided in
Section 2, or in any other agreement between DBS and Dealer; (b) any
---------
guarantor of Dealer's debts to DBS breaches any terms, warranties or
representations contained in any guaranty or other agreement between the
guarantor and DBS; (c) any representation, statement, report or certificate
made or delivered by Dealer or any guarantor to DBS is not accurate when
made; (d) Dealer fails to pay any portion of Dealer's debts to DBS when due
and payable hereunder or under any other agreement between DBS and Dealer;
(e) Dealer abandons any Collateral; (f) Dealer or any guarantor is or
becomes in default in the payment of any debt owed to any third party; (g)
a money judgment issues against Dealer or any guarantor; (h) an attachment,
sale or seizure issues or is executed against any assets of Dealer or of
any guarantor; provided that such judgement, attachment, sale or seizure is
in excess of $100,000.00; (i) the undersigned dies while Dealer's business
is operated as a sole proprietorship, any general partner dies while
Dealer's business is operated as a general or limited partnership, or any
member dies while Dealer's business is operated as a limited liability
company,
-5-
<PAGE>
as applicable; (j) any guarantor dies; (k) Dealer or any guarantor shall
cease existence as a corporation, partnership, limited liability company or
trust, as applicable; (1) Dealer or any guarantor ceases or suspends
business; (m) Dealer, any guarantor or any member while Dealer's business
is operated as a limited liability company, as applicable, makes a general
assignment for the benefit of creditors; (n) Dealer, any guarantor or any
member while Dealer's business is operated as a limited liability company,
as applicable, becomes insolvent or voluntarily or involuntarily becomes
subject to the Federal Bankruptcy Code, any state insolvency law or any
similar law; (o) any receiver is appointed for any assets of Dealer, any
guarantor or any member while Dealer's business is operated as a limited
liability company, as applicable; (p) any guaranty of Dealer's debts to DBS
is terminated; (q) Dealer or any guarantor misrepresents Dealer's or such
guarantor's financial condition or organizational structure; or (r) DBS
determines in good faith that it is insecure with respect to any of the
Collateral or the payment of any part of Dealer's obligation to DBS.
13. RIGHTS OF DBS UPON DEFAULT. In the event of a default which Dealer has
failed to cure in full within five (5) days from the date of receipt of
notice of such default from DBS:
(a) DBS may, at any time at DBS' election, do any one or more of the
following: declare all or any part of the debt Dealer owes DBS
immediately due and payable, together with all costs and expenses of
DBS' collection activity, including, without limitation, all
reasonable attorneys' fees; exercise any or all rights under
applicable law (including, without limitation, the right to possess,
transfer and dispose of the Collateral); and/or cease extending any
additional credit to Dealer (DBS' right to cease extending credit
shall not be construed to limit the discretionary nature of this
credit facility).
(b) Dealer will segregate and keep the Collateral in trust for DBS, and in
good order and repair, and will not sell, rent, lease, consign,
otherwise dispose of or use any Collateral, nor further encumber any
Collateral.
(c) Upon DBS' oral or written demand, Dealer will immediately deliver the
Collateral to DBS, in good order and repair, at a reasonable place
specified by DBS, together with all related documents; or DBS may, in
DBS' sole discretion and without notice or demand to Dealer, take
immediate possession of the Collateral together with all related
documents.
(d) DBS may, without notice, apply a default finance charge to Dealer's
outstanding principal indebtedness equal to the default rate specified
in Dealer's financing program with DBS, if any, or if there is none so
specified, at the lesser of 3% per annum above the rate in effect
immediately prior to the default, or the highest lawful contract rate
of interest permitted under applicable law.
All of DBS' rights and remedies are cumulative. DBS' failure to
exercise of DBS' rights or remedies hereunder will not waive any of
DBS' rights or remedies as to any past, current or future default.
14. SALE OF COLLATERAL. Dealer agrees that if DBS conducts a private sale of
any Collateral by requesting bids from 10 or more dealers or distributors
in that type of Collateral, any sale by DBS of such Collateral in bulk or
in parcels within 120 days of: (a) DBS' taking
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<PAGE>
possession and control of such Collateral; or (b) when DBS is otherwise
authorized to sell such Collateral; whichever occurs last, to the bidder
submitting the highest cash bid therefor, is a commercially reasonable sale
of such Collateral under the Uniform Commercial Code; provided that the
Collateral is sold "as is-where is". Dealer agrees that the purchase of any
Collateral by a Vendor, as provided in any agreement between DBS and the
Vendor, is a commercially reasonable disposition and private sale of such
Collateral under the Uniform Commercial Code, and no request for bids shall
be required. Dealer further agrees that 7 or more days prior written notice
will be commercially reasonable notice of any public or private sale
(including any sale to a Vendor). Dealer irrevocably waives any requirement
that DBS retain possession and not dispose of any Collateral until after an
arbitration hearing, arbitration award, confirmation, trial or final
judgment. If DBS disposes of any such Collateral other than as herein
contemplated, the commercial reasonableness of such disposition will be
determined in accordance with the laws of the state governing this
Agreement.
15. POWER OF ATTORNEY. Dealer grants DBS an irrevocable power of attorney to:
execute or endorse on Dealer's behalf any checks, financing statements,
instruments, Certificates of Title and Statements of Origin pertaining to
the Collateral; supply any omitted information and correct errors in any
documents between DBS and Dealer; initiate and settle any insurance claim
pertaining to the Collateral; and do anything to preserve and protect the
Collateral and DBS' rights and interest therein.
16. INFORMATION. DBS may provide to any third party any credit, financial or
other information on Dealer that DBS may from time to time possess. DBS may
obtain from any Vendor any credit, financial or other information regarding
Dealer that such Vendor may-from time to time possess.
17. TERMINATION. Any party may terminate this Agreement as it applies to such
party at any time by written notice received by the other party. If DBS
terminates this Agreement, Dealer agrees that if Dealer: (a) is not in
default hereunder, 30 days prior notice of termination is reasonable and
sufficient (although this provision shall not be construed to mean that
shorter periods may not, in particular circumstances, also be reasonable
and sufficient); or (b) is in default hereunder, no prior notice of
termination is required. Dealer will not be relieved from any obligation to
DBS arising out of DBS' advances or commitments made before the effective
termination date of this Agreement. DBS will retain all of its rights,
interests and remedies hereunder until Dealer has paid all of Dealer's
debts to DBS. All waivers set forth within this Agreement will survive any
termination of this Agreement.
18. BINDING EFFECT. Dealer cannot assign its interest in this Agreement
without DBS' prior written consent, although DBS may assign or participate
DBS' interest, in whole or in part, without Dealer's consent. This
Agreement will protect and bind DBS' and Dealer's respective heirs,
representatives, successors and assigns.
19. NOTICES. Except as otherwise stated herein, all notices, arbitration
claims, responses, requests and documents will be sufficiently given or
served if mailed or delivered: (a) to Dealer at Dealer's principal place of
business specified above; and (b) to DBS at 655 Maryville Centre Drive, St.
Louis, Missouri 63141-5832, Attention: General Counsel, or such other
address as the parties may hereafter specify in writing.
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<PAGE>
20. NO ORAL AGREEMENTS ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY,
EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT
INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBTS ARE NOT ENFORCEABLE.
TO PROTECT DEALER AND DBS FROM MISUNDERSTANDING OR DISAPPOINTMENT, ALL
AGREEMENTS COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH
IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN THE
PARTIES, EXCEPT AS SPECIFICALLY PROVIDED HEREIN OR AS THE PARTIES MAY
LATER AGREE IN WRITING TO MODIFY IT. THERE ARE NO UNWRITTEN AGREEMENTS
BETWEEN THE PARTIES.
21. OTHER WAIVERS. Dealer irrevocably waives notice of: DBS' acceptance of
this Agreement, presentment, demand, protest, nonpayment, nonperformance,
and dishonor. Dealer and DBS irrevocably waive all rights to claim any
punitive and/or exemplary damages.
22. SEVERABILITY. If any provision of this Agreement or its application is
invalid or unenforceable, the remainder of this Agreement will not be
impaired or affected and will remain binding and enforceable.
23. SUPPLEMENT. If Dealer and DBS have heretofore executed other agreements in
connection with all or any part of the Collateral, this Agreement shall
supplement each and every other agreement previously executed by and
between Dealer and DBS, and in that event this Agreement shall neither be
deemed a novation nor a termination of such previously executed agreement
nor shall execution of this Agreement be deemed a satisfaction of any
obligation secured by such previously executed agreement.
24. RECEIPT OF AGREEMENT. Dealer acknowledges that it has received a true and
complete copy of this Agreement. Dealer acknowledges that it has read and
understood this Agreement. Notwithstanding anything herein to the contrary:
(a) DBS may rely on any facsimile copy, electronic data transmission or
electronic data storage of this Agreement, any Statement of Transaction,
billing statement, invoice from a Vendor, financial statements or other
reports, and (b) such facsimile copy, electronic data transmission or
electronic data storage will be deemed an original, and the best evidence
thereof for all purposes, including, without limitation, under this
Agreement or any other agreement between DBS and Dealer, and for all
evidentiary purposes before any arbitrator, court or other adjudicatory
authority.
25. MISCELLANEOUS. Time is of the essence regarding Dealer's performance of
its obligations to DBS notwithstanding any course of dealing or custom on
DBS' part to grant extensions of time. Dealer's liability under this
Agreement is direct and unconditional and will not be affected by the
release or nonperfection of any security interest granted hereunder. DBS
will have the right to refrain from or postpone enforcement of this
Agreement or any other agreements between DBS and Dealer without prejudice
and the failure to strictly enforce these agreements will not be construed
as having created a course of dealing between DBS and Dealer contrary to
the specific terms of the agreements or as having modified, released or
waived the same. The express terms of this Agreement will not be modified
by any course of dealing, usage of trade, or custom of trade which may
deviate from the terms hereof. If Dealer fails to pay any taxes, fees or
other obligations which may impair DBS' interest in the Collateral, or
fails to keep the Collateral insured, DBS may, but shall not be required
to, pay such taxes, fees or obligations and pay the cost to insure the
Collateral, and the amounts paid will be: (a) an
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<PAGE>
additional debt owned by Dealer to DBS, which shall be subject to finance
charges as provided herein; and (b) due and payable immediately in full.
Dealer agrees to pay all of DBS' reasonable attorneys' fees and expenses
incurred by DBS in enforcing DBS' rights hereunder. The Section titles used
in this Agreement are for convenience only and do not define or limit the
contents of any Section.
26. BINDING ARBITRATION.
26.1 ARBITRABLE CLAIMS. Except as otherwise specified below, all actions,
disputes, claims and controversies under common law, statutory law or
in equity of any type or nature whatsoever (including, without
limitation, all torts, whether regarding negligence, breach of
fiduciary duty, restraint of trade, fraud, conversion, duress,
interference, wrongful replevin, wrongful sequestration, fraud in the
inducement, usury or any other tort, all contract actions, whether
regarding express or implied terms, such as implied covenants of good
faith, fair dealing, and the commercial reasonableness of any
Collateral disposition, or any other contract claim, all claims of
deceptive trade practices or lender liability, and all claims
questioning the reasonableness or lawfulness of any act), whether
arising before or after the date of this Agreement, and whether
directly or indirectly relating to: (a) this Agreement and/or any
amendments and addenda hereto, or the breach, invalidity or
termination hereof; (b) any previous or subsequent agreement between
DBS and Dealer; (c) any act committed by DBS or by any parent
company, subsidiary or affiliated company of DBS (the "DBS
Companies"), or by any employee, agent, officer or director of a DBS
Company whether or not arising within the scope and course of
employment or other contractual representation of the DBS Companies
provided that such act arises under a relationship, transaction or
dealing between DBS and Dealer; and/or (d) any other relationship,
transaction or dealing between DBS and Dealer (collectively the
"Disputes"), will be subject to and resolved by binding arbitration.
26.2 ADMINISTRATIVE BODY. All arbitration hereunder will be conducted by
the American Arbitration Association ("AAA"). If the AAA is
dissolved, disbanded or becomes subject to any state or federal
bankruptcy or insolvency proceeding, the parties will remain subject
to binding arbitration which will be conducted by a mutually
agreeable arbitral forum. The parties agree that all arbitrator(s)
selected will be attorneys with at least five (5) years secured
transactions experience. The arbitrator(s) will decide if any
inconsistency exists between the rules of any applicable arbitral
forum and the arbitration provisions contained herein. If such
inconsistency exists, the arbitration provisions contained herein
will control and supersede such rules. The site of all arbitration
proceedings will be in the Division of the Federal Judicial District
in which AAA maintains a regional office that is closest to Dealer.
26.3 DISCOVERY. Discovery permitted in any arbitration proceeding
commenced hereunder is limited as follows. No later than thirty (30)
days after the filing of a claim for arbitration, the parties will
exchange detailed statements setting forth the facts supporting the
claim(s) and all defenses to be raised during the arbitration, and a
list of all exhibits and witnesses. No later than twenty-one (21)
days prior to the arbitration hearing, the parties will exchange a
final list of all exhibits and all witnesses, including any
designation of any expert witness(es)
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together with a summary of their testimony, a copy of all documents
and a detailed description of any property to be introduced at the
hearing. Under no circumstances will the use of interrogatories,
requests for admission, requests for the production of documents or
the taking of depositions be permitted. However, in the event of the
designation of any expert witness(es), the following will occur: (a)
all information and documents relied upon by the expert witness(es)
will be delivered to the opposing party, (b) the opposing party will
be permitted to depose the expert witness(es), (c) the opposing party
will be permitted to designate rebuttal expert witness(es), and (d)
the arbitration hearing will be continued to the earliest possible
date that enables the foregoing limited discovery to be accomplished.
26.4 EXEMPLARY OR PUNITIVE DAMAGES. The Arbitrator(s) will not have the
authority to award exemplary or punitive damages.
26.5 CONFIDENTIALITY OF AWARDS. All arbitration proceedings, including
testimony or evidence at hearings, will be kept confidential,
although any award or order rendered by the arbitrator(s) pursuant to
the terms of this Agreement may be entered as a judgment or order in
any state or federal court and may be confirmed within the federal
judicial district which includes the residence of the party against
whom such award or order was entered. This Agreement concerns
transactions involving commerce among the several states. The Federal
Arbitration Act, Title 9 U.S.C. Sections 1 et seq., as amended
("FAA") will govern all arbitration(s) and confirmation proceedings
hereunder.
26.6 PREJUDGMENT AND PROVISIONAL REMEDIES. Nothing herein will be
construed to prevent DBS' or Dealer's use of bankruptcy,
receivership, injunction, repossession, replevin, claim and delivery,
sequestration, seizure, attachment, foreclosure, dation and/or any
other prejudgment or provisional action or remedy relating to any
Collateral for any current or future debt owed by either party to the
other. Any such action or remedy will not waive DBS' or Dealer's
right to compel arbitration of any Dispute.
26.7 ATTORNEYS' FEES. If either Dealer or DBS brings any other action for
judicial relief with respect to any Dispute (other than those set
forth in Section 26.6), the party bringing such action will be liable
------------
for and immediately pay all of the other party's costs and expenses
(including attorneys' fees') incurred to stay or dismiss such action
and remove or refer such Dispute to arbitration. If either Dealer or
DBS brings or appeals an action to vacate or modify an arbitration
award and such party does not prevail, such party will pay all costs
and expenses, including attorneys' fees, incurred by the other party
in defending such action. Additionally, if Dealer sues DBS or
institutes any arbitration claim or counterclaim against DBS in which
DBS is the prevailing party, Dealer will pay all costs and expenses
(including attorneys' fees) incurred by DBS in the course of
defending such action or proceeding.
26.8 LIMITATIONS. Any arbitration proceeding must be instituted:
(a) with respect to any Dispute for the collection of any debt owed
by either party to the other, within two (2) years after the date the
last payment was received by the instituting party; and
(b) with respect to any other Dispute, within two (2) years after the
date the incident giving rise thereto occurred, whether or not any
damage was sustained or capable of ascertainment or either party knew
of such incident. Failure to institute an arbitration
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proceeding with?? such period will constitute an absolute bar and waiver to
the institution of any proceeding, whether arbitration or a court
proceeding, with respect to such Dispute.
26.9 SURVIVAL AFTER TERMINATION. The agreement to arbitrate will survive
the termination of this Agreement.
27. INVALIDITY/UNENFORCEABILITY OF BINDING ARBITRATION. IF THIS AGREEMENT IS
FOUND TO BE NOT SUBJECT TO ARBITRATION, ANY LEGAL PROCEEDING WITH RESPECT
TO ANY DISPUTE WILL BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A
JUDGE WITHOUT A JURY. DEALER AND DBS WAIVE ANY RIGHT TO A JURY TRIAL IN ANY
SUCH PROCEEDING.
28. GOVERNING LAW. Dealer acknowledges and agrees that this and all other
agreements between Dealer and DBS have been substantially negotiated, and
will be substantially performed, in the state of MICHIGAN. Accordingly,
--------
Dealer agrees that all Disputes will be governed by, and construed in
accordance with, the laws of such state, except to the extent inconsistent
with the provisions of the FAA which shall control and govern all
arbitration proceedings hereunder.
IN WITNESS WHEREOF, Dealer and DBS have executed this Agreement as of the
date first set forth hereinabove.
THIS CONTRACT CONTAINS BINDING ARBITRATION, JURY WAIVER AND PUNITIVE DAMAGE
WAIVER PROVISIONS.
TRAVIS BOATS & MOTORS BATON, ROUGE, INC.
By:/s/ Mark Walton
-----------------------------------
Print Name: MARK WALTON
---------------------------
Title: PRESIDENT
--------------------------------
ATTEST:
/s/ Michael B. Perrine
- --------------------------------------
(Assistant Secretary)
Print Name: MICHAEL B. PERRINE
---------------------------
DEUTSCHE BUSINESS SERVICES CORPORATION
By:___________________________________
Print Name:___________________________
Title:________________________________
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SECRETARY'S CERTIFICATE OF RESOLUTION
I certify that I am the secretary or Assistant Secretary of the
corporation named below, and that the following completely and accurately sets
forth certain resolutions of the Board of Directors of the corporation adopted
at a special meeting thereof held on due notice (and with shareholder approval,
if required by law), at which meeting there was present a quorum authorized to
transact the business described below, and that the proceedings of the meeting
were in accordance with the certificate of incorporation, charter and by-laws of
the corporation, and that they have not been revoked, annulled or amended in any
manner whatsoever.
Upon motion duly made and seconded, the following resolution was
unanimously adopted after full discussion:
"RESOLVED, That the several officers, directors, and agents of this
corporation, or any one or more of them, are hereby authorized and empowered on
behalf of this corporation: to obtain financing from Deutsche Business Services
Corporation ("DBS"), in such amounts and on such terms as such officers,
directors or agents deem proper; to enter into financing, security, pledge and
other agreements with DBS relating to the terms upon which such financing may be
obtained and security and/or other credit support is to be furnished by this
corporation therefor; from time to time to supplement or amend any such
agreements; and from time to time to pledge, assign, mortgage, grant security
interests, and otherwise transfer, to DBS as collateral security for any
obligations of this corporation to DBS, whenever and however arising, any assets
of this corporation, whether now owned or hereafter acquired; the Board of
Directors hereby ratifying, approving and confirming all that any of said
officers, directors or agents have done or may do with respect to the
foregoing."
IN WITNESS WHEREOF, I have executed and affixed the seal of the corporation
on the date stated below.
Dated: Aug 17 , 1995 /s/ Michael B. Perrine
-------------- -------------------------------------------
(Assistant) Secretary
/s/ Travis Boats & Motors Batan Rouge, Inc.
-------------------------------------------
Corporate Name
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EXHIBIT 10.7(a)
INVENTORY LOAN AGREEMENT
THIS INVENTORY LOAN AGREEMENT between TBC ARKANSAS, INC, an Arkansas
Corporation, ("Borrower") and HIBERNIA NATIONAL BANK ("Lender") is made and
executed on the following terms and conditions.
DEFINITIONS. The following words shall have the following meanings when used in
this Agreement. Terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Louisiana Commercial Laws (La. R.S.
10:9-101, et seq.). All references to dollar amounts shall mean amounts in
lawful money of the United States of America.
ACCOUNTS RECEIVABLE. The words "Accounts Receivable" mean all accounts
receivable of Borrower, presently existing or hereafter arising out of the
sale and/or lease of all Inventory granted as security for the Loan.
ADDITIONAL ADVANCES. The words "Additional Advances" mean Advances made or
to be made to Borrower or on Borrower's behalf as provided in the section
herein entitled Funding of Advances.
ADVANCES. The word "Advances" means loan advances made or to be made to
Borrower or on Borrower's behalf (including pursuant to Drafts) on a line
of credit basis subject to the terms and conditions of this Agreement.
AGREEMENT. The word "Agreement" means this Inventory Loan Agreement, as
this Inventory Loan Agreement may be amended or modified from time to time,
together with all exhibits and schedules attached or to be attached to this
Inventory Loan Agreement from time to time.
AMOUNT FINANCED. The words "Amount Financed" mean that portion of the
Purchase Price of each Inventory Item financed by the Borrower pursuant to
this Agreement.
COLLATERAL. The word "Collateral" means and includes individually,
collectively, Interchangeably and without limitation (i) all Inventory
Items granted as collateral security for the Loan (which may include
certain items financed by other lenders, such as Transamerica Commercial
Finance Corporation and Deutsche Business Services Corporation, upon
completion of intercreditor agreements or similar documentation
satisfactory to Lender); (ii) all Accounts Receivable; (iii) all proceeds
of any insurance of Inventory granted as security for the Loan; (iv) all
deposit accounts of the Borrower maintained at the Lender; and (v) the
right to seek judicial special performance of sale or collection of the
Sales Price from any third-party purchaser, all as more particularly set
forth in the Security Agreement.
DRAFTS. The word "Drafts" means any draft for payment presented to Lender
by a Manufacturer, a distributor or a seller of an Inventory Item in
connection with the sale of such Inventory Item to the Borrower.
<PAGE>
EVENT OF DEFAULT. The words "Event of Default" mean individually,
collectively, and interchangeably any of the Events of Default set forth
below in the section titled "EVENTS OF DEFAULT."
GUARANTOR. The word "Guarantor" means and includes E. D. Bohls, Robert C.
Siddons, Ronnie L. Spradling, Jesse C. Cox, Joe E. Simpson, Mark T. Walton,
and Travis Boats & Motors, Inc.
INDEBTEDNESS. The word "Indebtedness" means and includes individually,
collectively, interchangeable and without limitation, any and all present
and future loans, extensions of credit, liabilities and/or obligations of
every nature and kind, whatsoever the Borrower may now and in the future
owe to or incur in favor of Lender and its successors and assigns,
including without limitation, Borrower's indebtedness in favor of Lender
under the Loan and Note, whether such loans, extensions of credit,
liabilities and/or obligations are direct or indirect, or by way of
assignment, and whether related or unrelated, or whether committed or
purely discretionary, and whether absolute or contingent, voluntary or
involuntary, determined or undetermined, liquidated or unliquidated, due or
to become due, together with interest, costs, expenses, attorneys fees and
other fees and charges, whether or not any such indebtedness may be barred
under any statute of limitations or may be otherwise unenforceable or
voidable for any reason. All indebtedness being cross-collateralized and
cross-defaulted, whether or not specifically stated therein.
INVENTORY ITEM. The words "Inventory Item" and "Inventory Items" mean
boats, trailers, and any attached accessories to said boats and trailers,
and motors which are purchased by Borrower as part of its inventory from
the Manufacturer, distributor, or other seller, but excluding parts
inventory and motors not purchased with funds borrowed from or advanced by
Lender.
LENDER. The word "Lender" means Hibernia National Bank, TIN: 72-0210640,
its successors and assigns, and any subsequent holder or holders of
Borrower's Loan and Note, or any interest therein.
LOAN. The words "Loan" and "Loans" mean and include any and all loans and
financial accommodations from Lender to Borrower whether now or hereafter
existing, and however evidenced, including without limitation, those loans
and financial accommodations described herein or described on any exhibit
or schedule attached to this Agreement from time to time, and further
including any and all subsequent amendments, additions, substitutions,
renewals and refinancings of Borrower's Loan.
MANUFACTURER. The word "Manufacturer" means and includes Johnson, Larson,
Cajun, Sprint, Beach Comber and Sea-Ark, and such other Manufacturers as
Borrower may do business with in the future, without limitation.
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MATURITY DATE. The words "Maturity Date" mean the maturity date set forth
in the Note, or any renewals or extensions therewith.
NOTE. The word "Note" means Borrower's promissory note or notes (including
modifications), evidencing Borrower's Loan obligations in favor of Lender,
as well as any substitute, replacement or refinancing note or notes
therefor. Borrower shall execute a separate Note for each line of credit
described below, unless a particular line of credit is a portion of and
included as a submit in another line of credit for which the Borrower has
executed a Note.
PRINCIPAL REPAYMENTS. The words "Principal Repayments" mean those
mandatory payments of principal as provided in the section herein entitled
Principal Repayments.
PURCHASE PRICE. The words "Purchase Price" mean the net amount paid by the
Borrower for Inventory Items purchased from Manufacturer or distributors or
other sellers (including destination charges).
RELATED DOCUMENTS. The words "Related Documents" mean and include
individually, collectively, interchangeable and without limitation all
promissory notes, credit agreements, loan agreements, guaranties, security
agreements, mortgages, collateral mortgages, deeds of trust, and all other
instruments, agreements and documents, whether now or hereafter existing,
executed in connection with the indebtedness.
SALES PRICE. The words "Sales Price" mean the gross amount payable by a
purchaser to the Borrower (inclusive of taxes, delivery or other charges)
as a result of the sale of Inventory Items subject to this Agreement.
SECURITY AGREEMENT. The words "Security Agreement" mean and include
individually, collectively, interchangeably and without limitation any
agreements, chattel mortgages, collateral chattel mortgages, promises,
covenants, arrangements, understandings or other agreements, whether
created by law, contract, or otherwise, evidencing, governing,
representing, or creating a Security Interest.
SECURITY INTEREST. The words "Security Interest" mean and include
individually, collectively, interchangeably and without limitation any and
all present and future security interests in the Collateral.
VOLUNTARY PREPAYMENT. The words "Voluntary Prepayment" mean a prepayment
of principal as provided in the section herein entitled Voluntary
Prepayment.
APPLICATION FOR AND PURPOSE OF THE LOAN. Borrower has applied to Lender for a
Loan for the purpose of financing Inventory Items on a floor plan basis.
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<PAGE>
BORROWER'S LOAN. Lender has agreed to consider making Advances to Borrower,
from time to time, one or more times, on a revolving line of credit basis up to
a maximum principal amount outstanding at any one or more times not to exceed
$3,250,000 (being $3,000,000 for new items and $250,000 for used items), or such
greater amounts as Lender may agree, in its sole discretion, from time to time,
subject to the limitations set forth below for specific kinds of Inventory
Items. Any Advances made by Lender in excess of the aforesaid amount shall be
governed by all of the terms and conditions of this Agreement and shall be
secured to the same extent as all other Advances on the Loan and Note. Borrower
agrees to be bound and obligated under the terms and conditions of this
Agreement and Lender's procedures and additional requirements for requesting
Advances, as well as any and all Notes evidencing same- and all Security
Agreements directly or indirectly securing repayment of the same.
INVENTORY LOANS. (a) The maximum amount of the line of credit to finance
Inventory Items is $3,250,000 (being $3,000,000 for new items and $250,000 for
used items), or such greater amounts as Lender may agree, in its sole
discretion, from time to time. (b) The Amount Financed for each Inventory Item
shall be 100% of the Purchase Price. However, as to used inventory, it shall
not exceed 100% of ABOS Marine Blue book loan value (or similar standard deemed
appropriate by Borrower and Lender by written agreement. (c) Initially,
Borrower's Note shall bear interest from date until paid at the Citibank prime
or base rate in effect from time to time (adjusted daily), plus one-half (1/2%)
percent per annum. This rate is based on Lender's current evaluation of
Borrower's credit status as a start-up company and the interest rate market.
Borrower acknowledges that Lender regularly reviews such decisions and that it
may modify that rate as to subsequent advances, in its sole, good faith
discretion, on notice to Borrower.
INTEREST COMPUTATION. Interest on any Note shall be computed on a daily basis
by-applying the rate of interest then in effect to the then outstanding
principal balance under the Note (as reflected in the Lender's internal records)
over the preceding calendar month. Interest shall be computed on the basis of a
360-day year over the actual number of days in a calendar year (365 or 366 in a
leap year).
INTEREST PAYMENTS. Interest on the Loan and Note shall be payable in arrears on
the first day of each calendar month beginning with the first day following the
date of the Note. If Borrower shall fail to pay interest when due, interest
shall continue to accrue to the unpaid principal balance on the Note over the
period of delinquency.
PRINCIPAL REPAYMENTS. Principal advanced on the Loan and Note shall be
repayable from time to time as follows:
(1) Upon the sale of any Inventory Item, the Borrower shall repay Lender
the total balance of the Amount Financed for such Inventory Item.
Repayment shall be made directly from the proceeds of the Sales Price
of such Inventory Item not later than the earlier of seven days after
the date of sale of Borrower's receipt of the Sales Price.
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<PAGE>
(2) For any New Inventory Item, Borrower shall repay 5% of the Amount
Financed for such Inventory Item on the first day of the thirteenth
month after the acquisition of the Inventory Item, with further
payments of 5% of the Amount Financed for such Inventory Item due
quarterly thereafter, with the balance of 80% of the Amount Financed
being payable on the first day of the twenty-fifth month after the
acquisition; provided that where any Inventory Item is sold prior to
such scheduled repayment date, Borrower shall pay the balance of the
Amount Financed not later than the earlier of seven days after the
date of sale of such Inventory Item or upon Borrower's receipt of the
Sale Price.
(3) Curtailment Payments on Used Inventory Items shall be 33 1/2 of the
Amount Financed on the first day of the thirteenth, fourteenth and
fifteenth month.
(4) Notwithstanding the above, if at any time the amount of Inventory
Items financed over twelve months old exceeds $75,000, Borrower will
repay the amount in excess of $75,000 in three equal monthly
installments commencing within ten days of being billed by Lender.
Inventory Items financed over twelve months old will be referred to
herein as "Curtailment Inventory Items."
VOLUNTARY PREPAYMENT. Borrower shall have the right to prepay the principal due
on the Loan and Note, in whole or in part, at any time from time to time, except
as limited herein, without premium or penalty. Prepayment shall be applied
first to the repayment of unpaid principal and then to the payment of accrued
but unpaid interest. To the extent that Borrower shall have made a voluntary
prepayment of principal and all of the conditions precedent to an Advance are
fulfilled then Borrower may request an Additional Advance. Voluntary
Prepayments which would have the effect of reducing the balance due under the
Inventory Loans to less than $500,000.00 may be first applied by Lender to other
loans of Borrower with Lender until such other loans have been reduced to a zero
balance.
PAYMENT IN FULL AT MATURITY. Notwithstanding anything contained herein,
Borrower shall pay the full balance of all principal outstanding on the Loan,
together with all accrued but unpaid interest, and all other amounts due by
Borrower on the Loan, and Note and other Indebtedness on the Maturity Date.
PAYMENTS GENERALLY. All payments on the Loan and Note shall be made in
immediately available funds. Whenever any payment to be made hereunder shall be
due on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and in such case, the extension of time shall be
included in computing the interest in connection with such payment.
MASTER NOTE. Each Note shall be considered for all purposes as a master note"
and shall evidence any and all Advances made by Lender to Borrower from time to
time on a line of credit basis. Borrower agrees to be liable for all sums
advanced by Lender under the Loan and Note in accordance with the instructions
of any officer or other representative of Borrower or
5
<PAGE>
credited to Borrower's deposit account(s) with Lender. Borrower additionally
agrees that the unpaid principal balance outstanding under the Loan and Note
shall at all times be evidenced, in Lender's discretion, by endorsements on the
Note, or alternatively by Lender's internal records, including Lender's daily
computer printout. Borrower additionally agrees that Lender may, with its sole
judgment, refuse to extend Advances to Borrower whenever Lender determines or
has reason to believe that any one or more of the following conditions exists or
will occur: (a) the amount of the requested Advance will result in Borrower
exceeding its maximum line of credit; (b) Borrower is not complying or has not
complied with Lender's procedures and additional requirements for requesting
Advances; (c) Borrower has failed to provide Lender with satisfactory
documentation to support the requested Advance; (d) Lender has reason to believe
that Borrower is presently not complying, or has not complied with the terms and
conditions of this Agreement, or has committed or is in the process of
committing an Event of Default hereunder or under the Note or under any Security
Agreement directly or indirectly securing repayment of the Loan and Note; or (e)
Lender deems itself to be insecure with regard to the repayment of the Loan and
Note. Lender shall have no obligations or liability to Borrower or to any other
person or persons arising out of or in any way accruing from Lender's reasonable
refusal to extend Advances to Borrower for any of the reasons stated above.
TERM. This Agreement shall be effective as of the date of its execution, and
shall continue in full force and effect until the later of the Maturity Date or
such time as the parties may agree in writing to terminate this Agreement
(provided, in each case, that Borrower's obligations under this Agreement shall
not terminate until all of Borrower's obligations in favor of Lender have been
paid in full, in principal, interest, costs, expenses, attorneys' fees, and
other fees and charges).
SECURITY INTEREST. The Indebtedness of the Borrower under the Loan and Note and
this Agreement shall be secured by the Collateral.
FIDUCIARY OBLIGATION OF BORROWER. The Borrower shall act in a fiduciary
capacity as to the Lender with regard to receipt and collection by the
Borrower in trust for and on behalf of the Lender of the Sales Price of
each Inventory Item subject to this Agreement. Any diversion or use by the
Borrower of any portion or amount of the Sales Price attributable to the
Amount Financed of such Inventory Item subject to this Agreement, for any
purpose other than to make payments to the Lender in accordance with this
Agreement, shall constitute a breach of the Borrower's fiduciary obligation
to the Lender and an Event of Default hereunder, entitling Lender to take
legal action against Borrower and Guarantor as provided herein or by law.
REPURCHASE AND/OR GUARANTY AGREEMENTS. Borrower's obligations to the
Lender under this Agreement are further secured by repurchase and/or
guaranty agreements executed by the Manufacturer(s) in favor of the Lender,
to the extent that such agreements exist.
GUARANTY. Borrower's obligations to the Lender under this Agreement are
further secured by a solidary continuing guaranty of the Guarantor(s).
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CONDITIONS PRECEDENT TO INITIAL ADVANCE. Lender's obligation to make the
initial Advance shall be subject to the fulfillment to Lender's satisfaction of
all of the conditions set forth below and the Related Documents:
CORPORATE RESOLUTION. A certified copy of resolutions properly adopted by
Borrower's Board of Directors, and certified by Borrower's corporate
secretary or assistant secretary, under which Borrower's Board of Directors
authorized one or more designated officers or employees to execute this
Agreement on behalf of Borrower and to execute the Note and any an all
Security Agreements directly or indirectly, securing repayment of the same,
and to consummate the borrows and other transactions as contemplated
hereunder, and to consent to the remedies following Borrower's default as
provided herein and under the above referenced Security Agreements.
CERTIFICATION. A certificate executed by Borrower's principal or executive of
officer, certifying that the representations and warranties set forth in this
Agreement are true and correct, and further certifying that no Event of Default
presently exists under this Agreement, or under the Note, or under any Security
Agreement directly or indirectly securing repayment of the same, as of the date
hereof.
LANDLORD'S LIEN. If the Borrower's premises on which the Inventory items are
located is leased, an agreement by Borrower's landlord either waiving the
landlord's privilege outright or subordinating the landlord's privilege to
Lender's Security interests.
LOAN DOCUMENTS. (a) the Note, (b) Security Agreements, (c) Financing Statements
perfecting Lender's Security interests, (d) evidence of insurance as required
below, and (e) any other documents required under this Agreement or by Lender or
its counsel, including without limitation any guaranties described herein.
CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligations to make the initial
Advance and each subsequent Advance under this Agreement shall be subject to the
fulfillment to Lender's satisfaction of all of the conditions set forth above,
in the Related Documents and in the following:
(1) DEALER AUTHORIZATION TO FLOOR. Borrower shall provide Lender with a
properly completed and signed form setting forth the following
information for the inventory item to be financed: make, model, year,
serial number, name and address of Manufacturer or seller if other
than Manufacturer, purchase price and the proposed Amount Financed.
(2) INVOICES. Borrower shall provide Lender with copies of the original
of all Manufacturer's invoices, a copy of the certificates of origin
(if applicable), and the original of all bills of sale (or check used
to purchase).
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(3) DRAFTS. In the case of payments to be made pursuant to Drafts, in
lieu of the documents described in Items (1) and (2) above, Lender
shall have been provided with a Draft identifying the inventory Items
sold to Borrower and to be financed; provided, that Lender shall have
no responsibility for determining the sufficiency, validity, accuracy
or authenticity of such Draft. Any payment of such Draft shall be
deemed an Advance under this Agreement, the Loan and the Note, and
Borrower unconditionally agrees to repay each such Advance regardless
of the sufficiency, validity, accuracy or authenticity of the Draft.
(4) PAYMENT OF FEES AND EXPENSES. Borrower shall have paid to Lender all
fees, charges and other expenses which are then due and payable as
specified in this Agreement or any Related Document.
(5) REPRESENTATIONS AND WARRANTIES. The representations and warranties
set forth in this Agreement, in the Related Documents, and in any
document or certificate delivered to Lender under this Agreement are
true and correct.
(6) NO EVENT OF DEFAULT. There shall not exist at the time of any advance
a condition which would constitute an Event of Default under this
Agreement or under any Related Document.
(7) ADDITIONAL ADVANCES. In the case of Additional Advances, the Borrower
has presented Lender with a written request for such an Advance and
the foregoing conditions relating to Payment of Fees and Expenses,
Representations and Warranties are fulfilled and no condition exists
which would constitute an Event of Default under this Agreement or any
Related Document.
FUNDING OF ADVANCES
INVENTORY ADVANCES. Should the Lender determine that all of the conditions
for Advances to finance inventory items have been satisfied, and that no
Event of Default exists under this Agreement or any Related Document,
Lender may, at its option, either (i) pay Drafts submitted directly to
Lender by Manufacturer, (ii) deposit the proceeds of the requested Advance
into Borrower's Account with Lender, or (iii) issue -cashiers check(s) or
wire funds directly to the Manufacturer or seller or distributor.
ADDITIONAL ADVANCES. Should the Lender determine that all of the
conditions for making an Advance set forth in subparagraph (7) above have
been fulfilled, and that no Event of Default exists under this Agreement or
any Related Document, then in Lender's discretion, and to the extent that
Borrower has made a Voluntary Prepayment of principal and such Voluntary
Prepayment exceeds the aggregate of all Additional Advances which are
outstanding and unpaid, then upon Borrower's request for an Additional
Advance equal to or less than such excess Lender may, at its option, either
(i) deposit the proceeds of the requested Advance into Borrower's account
with Lender or (ii) issue cashiers
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check(s) or (iii) wire funds directly to Borrower. In addition, Lender may,
at its option, apply the proceeds of the requested Advance toward amounts
due on the Loan and the Note with respect to Curtailment inventory items as
provided in the section of this Agreement entitled Principal Repayments.
Except as Lender, in its discretion, may permit the application of
Additional Advances to Principal Repayments with respect to Curtailment
inventory items,- the making of a Voluntary Prepayment does not relieve the
Borrower from its obligations to make Principal Repayments.
LIMIT ON ADVANCES. Notwithstanding anything contained in this Agreement,
Lender shall have no obligation to fund any Advance for more than the
Purchase Price of an inventory item (other than an Additional Advance) or
if such Advance will cause the total Loan to exceed the face amount of the
Note or the maximum amount of the applicable line of credit.
NO RELIANCE BY MANUFACTURERS OR SELLERS. Lender's obligations to fund
Advances (whether in the form of paying Drafts, issuing cashiers checks or
making deposits into Borrower's account) shall be subject to all of the
terms and conditions of this Agreement, the Note and Related Documents.
Lender shall have no liability or responsibility whatsoever to any
Manufacturer, seller or any person, firm or corporation other than Borrower
for the funding of any Advances under this Agreement.
REPRESENTATIONS AND WARRANTIES. Borrower and any Guarantor represent and
warrant to Lender as of the date of this Agreement and as of the date of each
disbursement of Loan proceeds that:
ORGANIZATION. Borrower is a corporation which is duly organized, validly
existing, and in good standing under the laws of the State of Arkansas.
LICENSE AND DEALERSHIP. Borrower is duly licensed in accordance with the
laws of the State of Arkansas and has a binding agreement with one or more
Manufacturers to purchase and sell Manufacturer's Inventory Items.
AUTHORIZATION. Borrower's and Guarantors' execution, delivery and
performance of this Agreement have been duly authorized, and to not
conflict with, and will not result in a violation of, or constitute or give
rise to a default under Borrower's Articles of Incorporation or Bylaws, or
any agreement or other instrument which may be binding upon Borrower, or
under any law or governmental regulation or court decree or order
applicable to Borrower and/or its properties. Borrower has the power and
authority to enter into the Loan and Note and to grant collateral security
there for. Borrower has the further power and authority to own and to hold
all of its assets and properties, and to carry on its business as presently
conducted.
FINANCIAL INFORMATION. Borrower's and Guarantors' financial statements
previously furnished to Lender are and were complete and correct, and were
prepared in accordance with generally accepted accounting principles, and
fairly represent Borrower's and
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Guarantors' financial condition as of the date or dates thereof. Borrower
and Guarantors have no contingent obligations or liabilities that were not
disclosed by, reserved against, and identified in said financial statements
or in the notes thereto. Since the dates of such financial statements,
there have been no material adverse change in Borrower's and Guarantors'
financial condition or business.
PROPERTIES. Except as contemplated by this Agreement or as previously
disclosed in Borrower's financial statements or in writing to Lender and as
accepted by Lender, and except for property tax liens for taxes not
presently due and payable, Borrower owns and has good title to all of
Borrower's properties free and clear of all Security Interests and has not
executed any security documents or financing statements relating to such
properties. All of Borrower's properties are titled in Borrower's legal
name, and Borrower has not used, or filed a financing statement under, any
other name for at least the last five (5) years.
HAZARDOUS SUBSTANCES. Except as disclosed to and acknowledged by Lender in
writing, Borrower represents and warrants that: Borrower has no knowledge
of, or reason to believe that there has been any use, storage, disposal or
release of any hazardous waste or substance by Borrower or any prior owners
or occupants of any of the properties, or any actual or threatened
litigation or claims of any kind by any person relating to such matters.
Borrower shall not use, store, dispose of, or release any hazardous waste
or substance on, under, or about any of the properties, unless such
activity is conducted in compliance with all applicable federal, state and
local laws, regulations, and ordinances, including without limitation,
those laws, regulations and ordinances described above.
LITIGATION. There are no suits or proceedings pending, or to the knowledge
of Borrower, threatened against or affecting Borrower or its assets, before
any court or by any governmental agency, other than those previously
disclosed to Lender in writing, which, if adversely determined, may have a
material adverse affect on Borrower's financial condition or business.
TAXES. To the best of Borrower's knowledge, all tax returns and reports of
Borrower that are or were required to be filed, have been filed, and all
taxes, assessments and other governmental charges have been paid in full,
except those presently being or to be contested by Borrower in good faith.
TAX IDENTIFICATION. Borrower has provided Lender with Borrower's correct
Federal Taxpayer identification Number. Borrower shall promptly notify
Lender should Borrower for any reason obtain a different Federal Taxpayer
identification Number.
LIEN PRIORITY. Unless otherwise previously disclosed to Lender in writing,
Borrower has not entered into or granted any Security Agreements, or
permitted the filing or attachment of any Security interests on or
affecting any of the Collateral directly or indirectly securing repayment
of Borrower's Loan and Note, that would be prior or that
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may in any way be superior to Lender's Security interests and rights in and
to such Collateral.
BINDING EFFECT. This Agreement, the Note and all Security Agreements
directly or indirectly securing repayment of Borrower's Loan and Note are
binding upon Borrower as well as upon Borrower's successors,
representatives and assigns, and are legally enforceable in accordance with
their respective terms.
COMMERCIAL PURPOSE. Borrower intends to use the Loan proceeds and each
Advance hereunder solely for business or commercial related purposes.
EMPLOYEE BENEFIT PLANS. Each employee benefit plan as to which Borrower
may have any liability complies in all material respects' with all
applicable requirements of law and regulations, and (i) no Reportable Event
(as defined in ERISA) has occurred with respect to any such plan, (ii)
Borrower has not withdrawn from any such plan or initiated steps to do so,
and (iii) no steps have been taken to terminate any such plan.
LOCATION OF BORROWER'S OFFICES AND COLLATERAL. The chief place of business
of Borrower is 2001 Highway 25 North, Heber Springs, Arkansas. The office
or offices where Borrower keeps its records concerning the Collateral is
and will be located at 13045 Research Blvd., Austin, Texas 78750. All
inventory items constituting Collateral will be located at 2001 Highway 25
North, Heber Springs, Arkansas, and 3034 Albert Pike, Hot Springs,
Arkansas.
INFORMATION. All information heretofore or contemporaneously herewith
furnished by Borrower to Lender for the purpose of or in connection with
this Agreement or any transaction contemplated hereby is, and all
information hereafter furnished by or on behalf of Borrower to Lender will
be, true and accurate in every material respect to the date as of which
such information is dated or certified; and none of such information is or
will be incomplete by omitting to state any material fact necessary to make
such information not misleading.
SURVIVAL OF REPRESENTATION AND WARRANTIES. Borrower Understands and agrees
that Lender is relying upon the above representation and warranties in
extending Loan Advances to Borrower. Borrower further agrees that the
foregoing representations and warranties shall be continuing in nature and
shall remain in full force and effect until such time as Borrower's Loan
and Note shall be paid in full, or until this Agreement shall be terminated
in the manner provided above, whichever is the last to occur.
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, so
long as this Agreement remains in effect, Borrower will:
LITIGATION. Promptly inform Lender in writing of (a) all material adverse
changes in Borrower's financial condition, and (b) all litigation and
claims and all threatened
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litigation and claims affecting Borrower or any Guarantor which could
materially affect the financial condition of Borrower or the financial
condition of any Guarantor.
FINANCIAL RECORDS. Maintain its books and records in accordance with
generally accepted accounting principles, applied on a consistent basis,
and permit Lender to examine and audit Borrower's books and records at all
reasonable times.
FINANCIAL REPORTS. Without demand or request by Lender, furnish Lender (i)
quarterly financial statements for Borrower and Guarantor, Travis Boats &
Motors, Inc. within 45 days of the end of each quarter; (ii) within 90 days
after the end of each fiscal year, audited consolidating financial
statements of the Guarantor, Travis Boats & Motors, Inc. prepared by an
independent certified public accountant acceptable to Lender; (iii) on an
annual basis, if the Loan is guaranteed by any natural person, a financial
statement of such person(s) on Lender's form.
ADDITIONAL INFORMATION. Furnish such additional information and
statements, lists of assets and liabilities, agings of receivables and
payables, inventory schedules, budgets, forecasts, tax returns, and other
reports with respect to Borrower's financial condition and business
operations as Lender may request from time to time.
MAINTAIN OF NET WORTH. Maintain a tangible net worth as to Borrower of
$50,000 and of Guarantor Travis Boats & Motors, Inc. of $1,250,000 (defined
as stockholder's equity less receivables due from officers and related
parties), verified as often as quarterly in a manner reasonably
satisfactory to Lender.
INSURANCE. Maintain fire and other risk insurance, public liability
insurance, and such other insurance as Lender may require with respect to
Borrower's properties and operations, inform, amounts, coverages and with
insurance companies reasonably acceptable to Lender. In addition, Borrower
shall maintain comprehensive coverage insurance on the inventory items for
the full replacement value thereof. Borrower, upon request of Lender, will
deliver to Lender from time to time the policies or certificates of
insurance in form satisfactory to Lender, including stipulation that
coverages will not be cancelled or diminished without at least thirty (30)
days' prior written notice to Lender. In connection with all policies
covering assets in which Lender holds or is offered a security interest for
the Loans, Borrower will provide Lender with such Lender's loss payable or
other endorsements as Lender may require. Lender's acceptance of policies
in lesser amounts or coverages will not constitute a waiver of Borrower's
obligations to provide the insurance described above. Borrower further
grants to Lender a security interest in all insurance proceeds and returned
unearned premiums. Borrower appoints Lender as its attorney in fact to
receive all insurance payments and to endorse all checks or drafts
representing such payments.
INSURANCE REPORTS. Furnish to Lender, upon request of Lender, reports on
each existing insurance policy showing such information as Lender may
reasonably request, including
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without limitation the following: (a) the name of the insurer; (b) the
risks insured; (c) the amount of the policy; (d) the properties insured;
(e) the then current property values on the basis of which insurance has
been obtained, and the manner of determining those values; and (f) the
expiration date of the policy. In addition, upon request of Lender (however
not more often than annually), Borrower will have an independent appraiser
satisfactory to Lender determine, as applicable, the actual cash value or
replacement cost of any Collateral.
OTHER AGREEMENTS. Comply with all terms and conditions of all other
agreements, whether now or hereafter existing, between Borrower and Lender,
including all Security Agreements, and between Borrower and any other
party, and -notify Lender immediately in writing of any default in
Connection with any other such agreements.
LOAN PROCEEDS. Use all Loan proceeds solely for Borrower's business
operations or as otherwise described above, unless specially consented to
the contrary by Lender in writing.
TAXES, CHARGES AND LIENS. Pay and discharge when due all of its
indebtedness and obligations, including without limitation all assessments,
taxes, governmental charges, levies and liens, of every kind and nature,
imposed upon Borrower or its properties, income or profits, prior to the
date on which penalties would attach, and all lawful claims that, if
unpaid, might become a lien or charge upon any of Borrower's properties,
income, or profits. Provided, however, Borrower will not be required to
pay and discharge any such assessment, tax, charge, levy, lien or claim so
long as (a) the legality of the same shall be contested in good faith by
appropriate proceedings, and (b) Borrower shall have established on its
books adequate reserves with respect to such contested assessment, tax,
charge, levy, lien, or claim in accordance with generally accepted
accounting practices. Borrower, upon demand of Lender, will furnish to
Lender evidence of payment of the assessments, taxes, charges, levies,
liens and claims and will authorize the appropriate governmental official
to deliver to Lender at any time a written statement of any assessments,
taxes, charges, levies, liens and claims against Borrower's properties,
income, or profits.
PERFORMANCE. Perform and comply with all terms, conditions and provisions
set forth in this Agreement and in all other instruments and agreements
between Borrower and Lender in a timely manner, and promptly notify Lender
if Borrower learns of the occurrence of any event which constitutes an
Event of Default under this Agreement.
OPERATIONS. Substantially maintain its present executive and management
personnel; conduct its business affairs in a reasonable and prudent manner
and in compliance with all applicable federal, state and municipal laws,
ordinances, rules and regulations respecting its properties, charters,
businesses and operations, including compliance with all minimum funding
standards and other requirements of the Employee Retirement
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Income Security Act of 1974, as amended, and other laws applicable to
Borrower's employee benefit plans.
INSPECTION AND AUDITS. Permit employees or agents of Lender at any
reasonable time, with or without notice and as frequently as Lender may
deem appropriate, to inspect and/or audit any and all Collateral and
Borrower's other properties and to examine or audit Borrower's books,
accounts, and records and to make copies and memoranda of Borrower's books,
accounts, and records. If Borrower now or at any time hereafter maintains
any records (including without limitation computer generated records and
computer software programs for the generation of such records) in the
possession of a third party, Borrower upon request of Lender, shall notify
such party to permit Lender free access to such records at all reasonable
times and to provide Lender with copies of any records it may reasonably
request, all at Borrower's expense.
CHANGE OF LOCATION OR NAME. Immediately notify Lender in writing of any
additions to or changes in the location of the Collateral or of Borrower's
businesses, or any change in Borrower's corporate name or trade name. To
the extent that the Collateral consists of boats and/or trailers, Borrower
shall not take or permit any action which would require registration of the
boats and/or trailers outside the State of Arkansas, without the prior
written consent of the Lender.
TITLE TO ASSETS AND PROPERTY. Maintain good and marketable title to all of
the Collateral, subject to no Security Interests except those in favor of
Lender.
NOTICE OF DEFAULT, LITIGATION AND ERISA MATTERS. Forthwith upon learning
of the occurrence of any of the following, Borrower shall provide Lender
with written notice thereof, describing the same and the steps being taken
by Borrower with respect thereto: (i) the occurrence of any Event of
Default, or (ii) the institution of, or any adverse determination in, any
litigation, arbitration proceeding or governmental proceedings, or (iii)
the occurrence of a Reportable Event under, or the institution of steps by
Borrower to withdraw from, or the institution of any steps to terminate,
any employee benefit plan as to which Borrower may have any liability.
EMPLOYEE BENEFIT PLANS. Maintain each employee benefit plan as to which it
may have any liability, in compliance with all applicable requirements of
law and regulations.
BONUSES AND DIVIDENDS. Subordinate payment of bonuses and/or dividends to
Borrower's employees or stockholders to payment of the Loan and Note, and
the Borrower shall not pay any such bonuses or dividends if an Event of
Default occurs and is continuing.
OTHER AGREEMENTS. Not enter into any agreement containing any provision
which would be violated or breached by the performance of its obligations
hereunder or under any
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<PAGE>
instrument or document delivered or to be delivered by it hereunder or in
connection herewith.
COMPLIANCE CERTIFICATE. Provide Lender at least annually and at such other
times as Lender may, in its sole discretion, elect with a certificate
executed by Borrower's chief financial officer, or other officer or person
acceptable to Lender, certifying that the representations and warranties
set forth in this Agreement are true and correct as of the date of the
certificate an further certifying that, as of the date of the certificate,
no Event of Default exists under this Agreement.
ADDITIONAL ASSURANCES. Make, execute and deliver to Lender such promissory
notes, mortgages, deeds of trust, security agreements, financing
statements, instruments, documents and other agreements as Lender or its
attorneys may reasonably request to evidence and secure the Loans and to
perfect all Security Interests.
CONDITION OF COLLATERAL. Maintain the Collateral in good operating
condition, repair and appearance. The Collateral will not be used for any
purpose other than demonstration at Borrower's place(s) of business set
forth above.
ORGANIZATION. Maintain Borrower as a separate corporation, agreeing not to
merge or consolidate with any other corporation and agreeing not to permit
any material change in the ownership of Borrower.
NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that as long as
this Agreement remains in effect, Borrower shall not, without the prior written
consent of Lender:
INDEBTEDNESS AND LIENS. (a) Except for trade debt incurred in the normal
course of business and indebtedness to Lender contemplated by this
Agreement, incur indebtedness for borrowed money in excess of $50,000, (b)
mortgage, assign pledge, lease, grant a security interest in, or encumber
(or permit any lien to exist) any of the Collateral, (c) sell with recourse
any of Borrower's accounts, except to Lender, (d) sell any Collateral
(except for sales in the ordinary course of business, and then only if the
portion of the proceeds required to be paid to Lender is promptly remitted
to Lender), (e) repay any funds advanced by officers, subsidiaries,
affiliates, shareholders or Guarantors unless the Loans are then current,
provision has been made for the next periodic payment, and the payment
would not otherwise cause an Event of Default hereunder.
CONTINUITY OF OPERATIONS. (a) Engage in any business activities
substantially different from those in which Borrower is presently engaged,
(b) cease operations, liquidate, merge or consolidate with any other
entity, (c) materially alter or amend Borrower's capital structure, or (d)
dispose of all or any material portion of Borrower's assets.
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LOANS, ACQUISITIONS AND GUARANTIES. (a) Loan money or assets, (b) purchase
or acquire any interest in any other enterprise or entity, or (c) incur any
obligation as surety or guarantor other than in the ordinary course of
business.
DEPOSIT ACCOUNTS. As collateral security for repayment of Borrower's Note and
all renewals and extensions, as well as to secure any and all other loans,
notes, indebtedness and obligations that borrower (or any of them) may now and
in the future owe to Lender or incur in Lender's favor, whether direct or
indirect, absolute or contingent due or to become due, of any nature and kind
whatsoever (with the exception of any indebtedness under a consumer credit card
account), Borrower is granting Lender a continuing security interest in any and
all funds that Borrower may now and in the future have on deposit with Lender or
i n certificates of deposit or other deposit accounts as to which Borrower is an
account holder (with the exception of IRA, pension, and other tax-deferred
deposits). Borrower further agrees that, in the event of default under this
Agreement, Lender may at any time apply any funds that Borrower may have on
deposit with Lender or in certificates of deposit or other deposit accounts as
to which Borrower is an account holder against the unpaid balance of Borrower's
Note and any and all other present and future indebtedness and obligations that
Borrower (or any of them) may then owe to Lender, in principal, interest, fees,
costs, expenses, and attorneys' fees.
EVENTS OF DEFAULT. The following actions or inactions or both shall constitute
Events of Default under this Agreement:
DEFAULT UNDER THE INDEBTEDNESS. Should Borrower default in the payment of
principal or interest under any of the Indebtedness.
DEFAULT UNDER THIS AGREEMENT. Should Borrower violate, or fail to comply
fully with any of the terms and conditions of, or default under this
Agreement.
DEFAULT UNDER OTHER AGREEMENTS. Should any event of default occur or exist
under the Security Agreement or any other Related Document which directly
or indirectly secures repayment of any of the Indebtedness.
OTHER DEFAULTS IN FAVOR OF LENDER. Should Borrower or any Guarantor
default under any other loan, extension of credit, security agreement, or
obligation in favor of Lender.
DEFAULT IN FAVOR OF THIRD PARTIES. Should Borrower or any Guarantor
default under any loan, extension of credit, security agreement, purchase
or sales agreement, or any other agreement, in favor of any other creditor
or person that may materially affect any of Borrower's property, or
Borrower's or any Guarantor's ability to perform their respective
obligations under this Agreement, or any Related Document, or pertaining to
the indebtedness.
DEFAULT BY GUARANTOR. Should the Guarantor default under the terms and
conditions of Guarantor's Guaranty of the Note and the Loan.
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<PAGE>
INSOLVENCY OR DEATH. Should the suspension, failure or insolvency, however
evidenced, of Borrower or any Guarantor occur or exist, including the
conduct of any "liquidation" or "going out of business sale," or should any
Guarantor die.
READJUSTMENT OF INDEBTEDNESS. Should proceedings for readjustment of
indebtedness, reorganization, composition or extension under any insolvency
law be brought by or against Borrower or any Guarantor.
ASSIGNMENT FOR BENEFIT OF CREDITORS. Should Borrower or any Guarantor file
proceedings for a respite or make a general assignment for the benefit of
creditors. Receivership. Should a receiver of all or any part of
Borrower's property, or the property of any Guarantor, be applied for or
appointed.
DISSOLUTION PROCEEDINGS. Should proceedings for the dissolution or
appointment of a liquidator of Borrower or any Guarantor be commenced.
FALSE STATEMENTS. Should any representation or warranty of Borrower or any
Guarantor made in connection with the Loan prove to be incorrect or
misleading in any respect.
LICENSE OR DEALERSHIP REVOCATION. Should the Borrower's license to operate
as a dealer be suspended, revoked or expire (without timely renewal) or
should Borrower's contractual right to operate as a dealer for any
Manufacturer be suspended, revoked or expire (without timely renewal).
Borrower may discontinue to do business with a Manufacturer and it will not
be a default under this Agreement provided the prior written consent of
Lender is obtained.
MATERIAL ADVERSE CHANGE. Should a material adverse change occur in the
condition (financial or otherwise) of the Borrower or any Guarantor.
CHANGE IN CONTROL. Should there be a material change in the beneficial
ownership of the Borrower without the Lender's prior written consent.
INSECURITY. Should Lender deem itself to be insecure with regard to
repayment of the Loan.
NOTICE/CURE. Notwithstanding any of the foregoing provisions prior to
Lender declaring Borrower in default hereunder or under the Loan, Lender
agrees to give Borrower written notice of any such default, and Borrower
shall have ten (10) days within which to cure a monetary default, or thirty
(30) days within which to cure a non-monetary default from the date
Lender's written notice is given, except in the event that Borrower fails
to timely repay the Amount Financed on the sale of Inventory and then still
fails to immediately make payment thereof in full upon demand by Lender, in
that event Borrower shall not be entitled to any further notice or grace
period tp cure such default and Lender may declare Borrower in default and
exercise all rights and remedies
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provided herein or by law. Notices shall be given to Borrower and to
Guarantor, Travis Boats & Motors, Inc., at 13045 Research Boulevard,
Austin, Texas, 78758.
EFFECT OF AN EVENT OF DEFAULT. If any Event of Default by Borrower, by
Guarantor, Travis Boats & Motors, Inc., or by any two or more individual
Guarantors, shall occur, all commitments and obligations of Lender under this
Agreement or the Related Documents or any other agreement immediately will
terminate (including any obligation to make further Loan Advances or
disbursements), and, at Lender's option, all Loans immediately will become due
and payable, all without notice of any kind to Borrower, except that in the case
of an Event of Default of the type described in the "Insolvency" subsection
above, such acceleration shall be automatic and not optional.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:
AUDITS. Borrower agrees to pay the costs for a maximum of eleven (11)
Inventory Audits per calendar year, per location. Payments for audit costs
will be due within 30 days of each audit, which shall be $300 for each
audit for each location, unless Lender and Borrower have agreed otherwise
as to cost and source of the audits. Notwithstanding the above, if any
audit is deemed to be unsatisfactory by Lender, Borrower agrees to pay the
costs for additional audits as deemed necessary by Lender.
AMENDMENTS. This Agreement, together with the Note, the Security Agreement
and any Related Documents, constitutes the entire understanding and
agreement of the parties as to the matters set forth in this Agreement. No
alteration of or amendment to this Agreement shall be effective unless
given in writing and signed by party or parties sought to be charged or
bound by the alteration or amendment.
APPLICABLE LAW. This Agreement has been forwarded to Lender and finally
accepted by Lender in the State of Louisiana. Lender and Borrower hereby
waive the right to any jury trial in any action, proceeding, or
counterclaim brought by either Lender or Borrower against the other. This
Agreement shall be governed by and construed in accordance with the laws of
the State of Louisiana.
CAPTION HEADINGS. Caption headings in this Agreement are for convenience
purpose only and are not to be used to interpret or define the provisions
of this Agreement.
CONSENT TO LOAN PARTICIPATION. Borrower agrees and consents to Lender's
sale or transfer, whether now or later, of one or more participation
interests in the Loans to one or more purchasers, whether related or
unrelated to Lender, subject to Borrower's reasonable counsel if any change
in servicing will occur as a result thereof. Lender may provide, without
any limitation whatsoever, to any one or more purchasers, or potential
purchasers, any information or knowledge Lender may have about Borrower or
about any other matter relating to the Loan, and Borrower hereby waives any
rights to privacy it
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may have with respect to such matters. Borrower additionally waives any and
all notices of sale of participation interests, as well as all notices of
any repurchase of such participation interests. Borrower also agrees that
the purchasers of any such participation interests will be considered as
the absolute owners of such interests in the Loans and will have all the,
rights granted under the participation agreement or agreements governing
the sale of such participation interests. Borrower further waives all
rights of offset or counterclaim that it may have now or later against
Lender or against any purchaser of such a participation interest and
unconditionally agrees that either Lender or such purchaser may enforce
Borrower's obligation under the Loans irrespective r the failure or
insolvency of any holder of any interest in the Loans. Borrower further
agrees that the purchaser of any such participation interests may enforce
its interests irrespective of any personal claims or defenses that Borrower
may have against Lender.
COSTS AND EXPENSES. Borrower agrees to pay upon demand all of Lender's
reasonable out-of-pocket expenses, including attorneys' fees, incurred in
connection with this Agreement or in connection with the Loans made
pursuant to this Agreement. Lender may pay someone else to help collect
the Loans and to enforce this Agreement, and Borrower will pay that amount.
This includes, subject to any limits under applicable law, Lender's
attorneys' fees and legal expenses, whether or not there is a lawsuit,
including attorneys' fees for bankruptcy proceedings (including efforts to
modify or vacate any automatic stay or injunction), appeals, and any
anticipated post-judgment collection services. Borrower also will pay any
court costs, in addition to all other sums provided by law.
NOTICES. To give Borrower any notice required under this Agreement, Lender
may hand deliver or mail such notice, to Borrower. Lender will deliver or
mail any notice to Borrower at the following address (or any address which
Borrower may have given Lender by written notice as provided in this
paragraph):
BORROWER'S ADDRESS: c/o The Travis Group
13045 Research Blvd.
Austin, Texas 78750
In the event that there is more than one Borrower under this Agreement,
notice to a single Borrower shall be considered as notice to all Borrowers.
To give Lender any notice under this Agreement, Borrower (or any Borrower)
shall mail the notice to Lender by registered or certified mail at the
following address (or at any other address that Lender may have given to
Borrower by written notice as provided in this paragraph):
LENDER'S ADDRESS: 440 Third Street
P. O. Box 3597
Baton Rouge, LA 70820
Attn: Wade Carwile
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All notices required or permitted under this Agreement must be in writing
and will be considered as given on the day it is delivered by hand or
deposited in the U.S Mail, by registered or certified mail to the address
specified in this Agreement.
SEVERABILITY. If a court of competent jurisdiction finds any provision of
this Agreement to be invalid or unenforceable as to any person or
circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible, any
such offending provision shall be deemed to be modified to be within the
limits of enforceability or validity; however, if the offending provision
cannot be so modified, it shall be stricken and all other provisions of
this Agreement in all other respects shall remain valid and enforceable.
SOLE DISCRETION OF LENDER. Whenever Lender's consent or approval is
required under this Agreement, the decision as to whether or not to consent
or approve shall be in the sole and exclusive discretion of Lender and
Lender's decision shall be final and conclusive.
SUBSIDIARIES AND AFFILIATES OF BORROWER. To the extent the context of any
provisions of this Agreement makes it appropriate, including without
limitation any representation, warranty or covenant, the word Borrower, as
used herein shall include all subsidiaries and affiliates of Borrower.
Notwithstanding the foregoing, however, under no circumstances shall this
Agreement be construed to require Lender to make any Loan or other
financial accommodation to any subsidiary or affiliate of Borrower.
SUCCESSORS AND ASSIGNS. All covenants and agreements contained by or on
behalf of Borrower shall bind its successors and assigns and shall inure to
the benefit of Lender, its successors and assigns. Borrower shall not,
however, have the right to assign its rights under this Agreement or any
interest therein, without the prior written consent of Lender.
SURVIVAL. All warranties, representations, and covenants made by Borrower
in this Agreement or in any certificate or other instrument delivered by
Borrower to Lender under this Agreement shall be considered to have been
relied upon by Lender and will survive the making of the Loan and delivery
to Lender of the Related Documents, regardless of any investigation made by
Lender or on Lender's behalf.
WAIVER. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in writing and signed by Lender. No
delay or omission on the part of Lender in exercising any right shall
operate as a waiver of such right or any other right. A waiver by Lender
of a provision of this Agreement shall not prejudice or constitute a waiver
of Lender's right otherwise to demand strict compliance with that provision
or any other provision of this Agreement. No prior waiver by Lender, nor
any course of dealing between Lender and Borrower, or between Lender and
any Guarantor, shall constitutes a waiver of any of Lender's rights or of
any obligations of Borrower or
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of any Guarantor as to any future transactions. Whenever the consent of
Lender is required under this Agreement, the granting of such consent by
Lender in any instance shall not constitute continuing consent in
subsequent instances where such consent is required and in all cases, such
consent may be granted or withheld in the sole discretion of Lender.
CONSTRUCTION. In the event of any conflict between the terms of this
Agreement and those of any Related Document, the terms of this Agreement
shall control. However, this Agreement also incorporates by reference
Lender's letter of commitment of August 16, 1995, ("Commitment") and in the
event there are requirements or remedies set forth in the Commitment which
are beneficial to Lender and which are not addressed herein or in the
Related Documents, to that extent the Commitment shall control.
This Agreement may be signed in counterparts which shall be construed as one
agreement, when signed by all parties, and effective as of September 20, 1995.
BORROWER:
TBC ARKANSAS, INC.
By: /s/ Mark Walton
-------------------------------------
Name: /s/ Mark Walton
-----------------------------------
Title: President
----------------------------------
LENDER:
HIBERNIA NATIONAL BANK
By: [SIGNATURE ILLEGIBLE]
-------------------------------------
Authorized Officer
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EXHIBIT 10.8(a)
INVENTORY LOAN AGREEMENT
THIS INVENTORY LOAN AGREEMENT between TRAVIS BOATS & MOTORS BATON ROUGE,
INC. ("Borrower") and HIBERNIA NATIONAL BANK ("Lender") is made and executed on
the following terms and conditions.
DEFINITIONS. The following words shall have the following meanings when used in
this Agreement. Terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Louisiana Commercial Laws (La. R.S.
10:9-101, et seq.). All references to dollar amounts shall mean amounts in
lawful money of the United States of America.
ACCOUNTS RECEIVABLE. The words "Accounts Receivable" mean all accounts
receivable of Borrower, presently existing or hereafter arising out of the
sale and/or lease of all Inventory granted as security for the Loan.
ADDITIONAL ADVANCES. The words "Additional Advances" mean Advances made or
to be made to Borrower or on Borrower's behalf as provided in the section
herein entitled Funding of Advances.
ADVANCES. The word "Advances" means loan advances made or to be made to
Borrower or on Borrower's behalf (including pursuant to Drafts) on a line
of credit basis subject to the terms and conditions of this Agreement.
AGREEMENT. The word "Agreement" means this Inventory Loan Agreement, as
this Inventory Loan Agreement may be amended or modified from time to time,
together with all exhibits and schedules attached or to be attached to this
Inventory Loan Agreement from time to time.
AMOUNT FINANCED. The words "Amount Financed" mean that portion of the
Purchase Price of each Inventory Item financed by the Borrower pursuant to
this Agreement.
COLLATERAL. The word "Collateral" means and includes individually,
collectively, interchangeably and without limitation (i) all Inventory
Items granted as collateral security for the Loan; (ii) all Accounts
Receivable; (iii) all proceeds of any insurance of Inventory granted as
security for the Loan; (iv) all deposit accounts of the Borrower maintained
at the Lender; and (v) the right to seek judicial special performance of
sale or collection of the Sales Price from any third-party purchaser, all
as more particularly set forth in the Security Agreement.
DRAFTS. The word "Drafts" means any draft for payment presented to Lender
by a Manufacturer, a distributor or a seller of an Inventory Item in
connection with the sale of such Inventory Item to the Borrower.
EVENT OF DEFAULT. The words "Event of Default" mean individually,
collectively, and interchangeably any of the Events of Default set forth
below in the section titled "EVENTS OF DEFAULT."
GUARANTOR. The word "Guarantor" means and includes E. D. Bohls, Robert C.
Siddons, Ronnie L. Spradling, Jesse C. Cox, Joe E. Simpson, Mark T. Walton,
and Travis Boats & Motors, Inc.
INDEBTEDNESS. The word "Indebtedness" means and includes individually,
collectively, interchangeably and without limitation, any and all present
and future loans, extensions of credit, liabilities and/or obligations of
every nature
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and kind, whatsoever that Borrower may now and in the future owe to or
incur in favor of Lender and its successors and assigns, including without
limitation, Borrower's indebtedness in favor of Lender under the Loan and
Note, whether such loans, extensions of credit, liabilities and/or
obligations are direct or indirect, or by way of assignment, and whether
related or unrelated, or whether committed or purely discretionary, and
whether absolute or contingent, voluntary or involuntary, determined or
undetermined, liquidated or unliquidated, due or to become due, together
with interest, costs, expenses, attorneys' fees and other fees and charges,
whether or not any such indebtedness may be barred under any statute of
limitations or may be otherwise unenforceable or voidable for any reason.
INVENTORY ITEM. The words "Inventory Item" and "Inventory Items" mean
boats, trailers, and any attached accessories to said boats and trailers,
and motors which are purchased by Borrower as part of its inventory from
the Manufacturer, distributor, or other seller.
LENDER. The word "Lender" means Hibernia National Bank, TIN: 72-0210640,
its successors and assigns, and any subsequent holder or holders of
Borrower's Loan and Note, or any interest therein.
LOAN. The words "Loan" and "Loans" mean and include any and all loans and
financial accommodations from Lender to Borrower whether now or hereafter
existing, and however evidenced, including without limitation, those loans
and financial accommodations described herein or described on any exhibit
or schedule attached to this Agreement from time to time, and further
including any and all subsequent amendments, additions, substitutions,
renewals and refinancings of Borrower's Loan.
MANUFACTURER. The word "Manufacturer" means and includes Johnson, Larson,
Bass Cat, Sprint, Beach Comber and Crestliner, and such other Manufacturers
as Borrower may do business with in the future.
MATURITY DATE. The words "Maturity Date" mean the maturity date set forth
in the Note, or any renewals or extensions therewith.
NOTE. The word "Note" means Borrower's promissory note or notes, evidencing
Borrower's Loan obligations in favor of Lender, as well as any substitute,
replacement or refinancing note or notes therefor. Borrower shall execute a
separate Note for each line of credit described below, unless a particular
line of credit is a portion of and included as a sublimit in another line
of credit for which the Borrower has executed a Note.
PRINCIPAL REPAYMENTS. THE WORDS "Principal Repayments" mean those
mandatory payments of principal as provided in the section herein entitled
Principal Repayments.
PURCHASE PRICE. The words "Purchase Price" mean the net amount paid by the
Borrower for Inventory Items purchased from Manufacturer or distributors or
other sellers (including destination charges).
RELATED DOCUMENTS. The words "Related Documents" mean and include
individually, collectively, interchangeably and without limitation all
promissory notes, credit agreements, loan agreements, guaranties, security
agreements, mortgages, collateral mortgages, deeds of trust, and all other
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instruments, agreement, and documents, whether now or hereafter existing,
executed in connection with the indebtedness.
SALES PRICE. The words "Sales Price" mean the gross amount payable by a
purchaser to the Borrower (inclusive of taxes, delivery or other charges)
as a result of the sale of Inventory Items subject to this Agreement.
SECURITY AGREEMENT. The words "Security Agreement" mean and include
individually, collectively, interchangeably and without limitation any
agreements, chattel mortgages, collateral chattel mortgages, promises,
covenants, arrangements, understandings or other agreements, whether
created by law, contract, or otherwise, evidencing, governing,
representing, or creating a Security Interest.
SECURITY INTEREST. The words "Security Interest" mean and include
individually, collectively, interchangeably and without limitation any and
all present and future security interests in the Collateral.
VOLUNTARY PREPAYMENT. The words "Voluntary Prepayment" mean a prepayment of
principal as provided in the section herein entitled Voluntary Prepayment.
APPLICATION FOR AND PURPOSE OF THE LOAN. Borrower has applied to Lender for a
Loan for the purpose of financing Inventory Items on a floor plan basis.
BORROWER'S LOAN. Lender has agreed to consider making Advances to Borrower, from
time to time, one or more times, on a revolving line of credit basis up to a
maximum principal amount outstanding at any one or more times not to exceed
$650,000, or such greater amounts as Lender may agree, in its sole discretion,
from time to time, subject to the limitations set forth below for specific kinds
of Inventory Items. Any Advances made by Lender in excess of the aforesaid
amount shall be governed by all of the terms and conditions of this Agreement
and shall be secured to the same extent as all other Advances on the Loan and
Note. Borrower agrees to be bound and obligated under the terms and conditions
of this Agreement and Lender's procedures and additional requirements for
requesting Advances, as well as any and all Notes evidencing same and all
Security Agreements directly or indirectly securing repayment of the same.
INVENTORY LOANS. The maximum amount of the line of credit to finance Inventory
Items is $650,000, or such greater amounts as Lender may agree, in its sole
discretion, from time to time. The Amount Financed for each Inventory Item shall
be 100% of the Purchase Price. Borrower's Note shall bear interest from date
until paid at the Citibank prime or base rate in effect from time to time
(adjusted daily), plus 1% per annum.
INTEREST COMPUTATION. Interest on any Note shall be computed on a daily basis by
applying the rate of interest then in effect to the then outstanding principal
balance under the Note (as reflected in the Lender's internal records) over the
preceding calendar month. Interest shall be computed on the basis of a 360-day
year over the actual number of days in a calendar year (365 or 366 in a leap
year).
INTEREST PAYMENTS. Interest on the Loan and Note shall be payable in arrears on
the first day of each calendar month beginning with the first day following the
date of the Note. If Borrower shall fail to pay interest when due, interest
shall continue to accrue to the unpaid principal balance on the Note over the
period of delinquency.
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PRINCIPAL REPAYMENTS. Principal advanced on the Loan and Note shall be repayable
from time to time as follows:
(1) Upon the sale of any Inventory Item, the Borrower shall repay Lender the
total balance of the Amount Financed for such Inventory Item. Repayment
shall be made directly from the proceeds of the Sales Price of such
Inventory Item not later than the earlier of seven days after the date of
sale or Borrower's receipt of the Sales Price.
(2) For any Inventory Item, Borrower shall repay 5% of the Amount Financed for
such Inventory Item on the first day of the thirteenth month after the
acquisition of the Inventory Item, with further payments of 5% of the Amount
Financed for such Inventory Item due quarterly thereafter, with the balance
of 80% of the Amount Financed being payable on the first day of the twenty-
fifth month after the acquisition; provided that where any Inventory Item is
sold prior to such scheduled repayment date, Borrower shall pay the balance
of the Amount Financed not later than the earlier of seven days after the
date of sale of such Inventory Item or upon Borrower's receipt of the Sale
Price.
Notwithstanding the above, if at any time the amount of Inventory Items
financed over twelve months old exceeds $75,000, Borrower will repay the
amount in excess of $75,000 in three equal monthly installments commencing
within ten days of being billed by Lender. Inventory Items financed over
twelve months old will be referred to herein as "Curtailment Inventory
Items".
VOLUNTARY PREPAYMENT. Borrower shall have the right to prepay the principal due
on the Loan and Note, in whole or in part, at any time from time to time, except
as limited herein, without premium or penalty. Prepayment shall be applied first
to the repayment of unpaid principal and then to the payment of accrued but
unpaid interest. To the extent that Borrower shall have made a voluntary
prepayment of principal and all of the conditions precedent to an Advance are
fulfilled then Borrower may request an Additional Advance. Voluntary Prepayments
which would have the effect of reducing the balance due under the Inventory
Loans to less than $150,000.00 may be first applied by Lender to other loans of
Borrower with Lender until such other loans have been reduced to a zero balance.
PAYMENT IN FULL AT MATURITY. Notwithstanding anything contained herein, Borrower
shall pay the full balance of all principal outstanding on the Loan, together
with all accrued but unpaid interest, and all other amounts due by Borrower on
the Loan and Note and other Indebtedness on the Maturity Date.
PAYMENTS GENERALLY. All payments on the Loan and Note shall be made in
immediately available funds. Whenever any payment to be made hereunder shall be
due on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and in such case, the extension of time shall be
included in computing the interest in connection with such payment.
MASTER NOTE. Each Note shall be considered for all purposes as a "master note"
and shall evidence any and all Advances made by Lender to Borrower from time to
time on a line of credit basis. Borrower agrees to be liable for all sums
advanced by Lender under the Loan and Note in accordance with the instructions
of any officer or other representative of Borrower or credited to Borrower's
deposit account(s) with Lender. Borrower additionally agrees that the unpaid
principal balance outstanding under the Loan and Note shall at all times be
evidenced, in Lender's discretion, by endorsements on the Note, or alternatively
by Lender's internal records, including Lender's daily computer printout.
Borrower additionally agrees that Lender may, with its
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sole judgment, refuse to extend Advances to Borrower whenever Lender determines
or has reason to believe that any one or more of the following conditions
exists or will occur: (a) the amount of the requested Advance will result in
Borrower exceeding its maximum line of credit; (b) Borrower is not complying or
has not complied with Lender's procedures and additional requirements for
requesting Advances; (c) Borrower has failed to provide Lender with satisfactory
documentation to support the requested Advance; (d) Lender has reason to believe
that Borrower is presently not complying, or has not complied with the terms and
conditions of this Agreement, or has committed or is in the process of
committing an Event of Default hereunder or under the Note or under any Security
Agreement directly or indirectly securing repayment of the Loan and Note; or (e)
Lender deems itself to be insecure with regard to the repayment of the Loan and
Note. Lender shall have no obligations or liability to Borrower or to any other
person or persons arising out of or in any way accruing from Lender's reasonable
refusal to extend Advances to Borrower for any of the reasons stated Above.
TERM. This Agreement shall be effective as of the date of its execution, and
shall continue in full force and effect until the later of the Maturity Date or
such time as the parties may agree in writing to terminate this Agreement
(provided, in each case, that Borrower's obligations under this Agreement shall
not terminate until all of Borrower's obligations in favor of Lender have been
paid in full, in principal, interest, costs, expenses, attorneys' fees, and
other fees and charges).
SECURITY INTEREST. The Indebtedness of the Borrower under the Loan and Note and
this Agreement shall be secured by the Collateral.
FIDUCIARY OBLIGATION OF BORROWER. The Borrower shall act in a fiduciary
capacity as to the Lender with regard to receipt and collection by the
Borrower in trust for and on behalf of the Lender of the Sales Price of
each Inventory Item subject to this Agreement. Any diversion or use by the
Borrower of any portion or amount of the Sales Price attributable to the
Amount Financed of such Inventory Item subject to this Agreement, for any
purpose other than to make payments to the Lender in accordance with this
Agreement, shall constitute a breach of the Borrower's fiduciary
obligation to the Lender and an Event of Default hereunder, entitling
Lender to take legal action against Borrower and Guarantor as provided
herein or by law.
REPURCHASE AND/OR GUARANTY AGREEMENTS. Borrower's obligations to the Lender
under this Agreement are further secured by repurchase and/or guaranty
agreements executed by the Manufacturer(s) in favor of the Lender, to the
extent that such agreements exist.
GUARANTY. Borrower's obligations to the Lender under this Agreement are
further secured by a solidary continuing' guaranty of the Guarantor(s).
CONDITIONS PRECEDENT TO INITIAL ADVANCE. Lender's obligation to make the
initial Advance shall be subject to the fulfillment to Lender's satisfaction of
all of the conditions set forth below and the Related Documents:
CORPORATE RESOLUTION. A certified copy of resolutions properly adopted by
Borrower's Board of Directors, and certified by Borrower's corporate
secretary or assistant secretary, under which Borrower's Board of Directors
authorized one or more designated officers or employees to execute this
Agreement on behalf of Borrower and to execute the Note and any and all
Security Agreements directly or indirectly, securing repayment of the same,
and to
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consummate the borrowings and other transactions as contemplated hereunder,
and to consent to the remedies following Borrower's default as provided
herein and under the above referenced Security Agreements.
CERTIFICATION. A Certificate executed by Borrower's principal or executive
officer, certifying that the representations and warranties set forth in
this Agreement are true and correct, and further certifying that no Event
of Default presently exists under this Agreement, or under the Note, or
under any Security Agreement directly or indirectly securing repayment of
the same, as of the date hereof.
LANDLORD'S LIEN. If the Borrower's premises on which the Inventory Items
are located is leased, an agreement by Borrower's landlord either waiving
the landlord's privilege outright or subordinating the landlord's privilege
to Lender's Security Interests.
LOAN DOCUMENTS. (a) the Note, (b) Security Agreements, (c) Financing
Statements perfecting Lender's Security Interests, (d) evidence of
insurance as required below, and (e) any other documents required under
this Agreement or by Lender or its counsel, including without limitation
any guaranties described herein.
CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligations to make the initial
Advance and each subsequent Advance under this Agreement shall be subject to the
fulfillment to Lender's satisfaction of all of the conditions set forth above,
in the Related Documents and in the following:
(1) DEALER AUTHORIZATION TO FLOOR. Borrower shall provide Lender with a
properly completed and signed form setting forth the following
information for the Inventory Item to be financed: make, model, year,
serial number, name and address of Manufacturer or seller if other than
Manufacturer, purchase price and the proposed Amount Financed.
(2) INVOICES. Borrower shall provide Lender with copies of the original of
all Manufacturer's invoices, a copy of the certificates of origin (if
applicable), and the original of all bills of sale (or check used to
purchase).
(3) DRAFTS. In the case of payments to be made pursuant to Drafts, in lieu
of the documents described in Items (1) and (2) above, Lender shall
have been provided with a Draft identifying the Inventory Items sold to
Borrower and to be financed; provided, that Lender shall have no
responsibility for determining the sufficiency, validity, accuracy or
authenticity of such Draft. Any payment of such Draft shall be deemed
an Advance under this Agreement, the Loan and the Note, and Borrower
unconditionally agrees to repay each such Advance regardless of the
sufficiency, validity, accuracy or authenticity of the Draft.
(4) PAYMENT OF FEES AND EXPENSES. Borrower shall have paid to Lender all
fees, charges and other expenses which are then due and payable as
specified in this Agreement or any Related Document.
(5) REPRESENTATIONS AND WARRANTIES. The representations and warranties set
forth in this Agreement, in the Related Documents, and in any document
or certificate delivered to lender under this Agreement are true and
correct.
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(6) NO EVENT OF DEFAULT. There shall not exist at the time of any advance
a condition which would constitute an Event of Default under this
Agreement or under any Related Document.
(7) ADDITIONAL ADVANCES. In the case of Additional Advances, the Borrower
has presented Lender with a written request for such an Advance and
the foregoing conditions relating to Payment of Fees and Expenses,
Representations and Warranties are fulfilled and no condition exists
which would constitute an Event of Default under this Agreement or any
Related Document.
FUNDING OF ADVANCES
INVENTORY ADVANCES. Should the Lender determine that all of the conditions
for Advances to finance Inventory Items have been satisfied, and that no
Event of Default exists under this Agreement or any Related Document,
Lender may, at its option, either (i) pay Drafts submitted directly to
Lender by Manufacturer, (ii) deposit the proceeds of the requested Advance
into Borrower's Account with Lender, or (iii) issue cashiers check(s) or
wire funds directly to the Manufacturer or seller or distributor.
ADDITIONAL ADVANCES. Should the Lender determine that all of the conditions
for making an Advance set forth in subparagraph (7) above have been
fulfilled, and that no Event of Default exists under this Agreement or any
Related Document, then in Lender's discretion, and to the extent that
Borrower has made a Voluntary Prepayment of principal and such Voluntary
Prepayment exceeds the aggregate of all Additional Advances which are
outstanding and unpaid, then upon Borrower's request for an Additional
Advance equal to or less than such excess Lender may, at its option, either
(i) deposit the proceeds of the requested Advance into Borrower's account
with Lender or (ii) issue cashiers check(s) or (iii) wire funds directly to
Borrower. In addition, Lender may, at its option, apply the proceeds of the
requested Advance toward amounts due on the Loan and the Note with respect
to Curtailment Inventory Items as provided in the section of this Agreement
entitled Principal Repayments. Except as Lender, in its discretion, may
permit the application of Additional Advances to Principal Repayments with
respect to Curtailment Inventory Items, the making of a Voluntary
Prepayment does not relieve the Borrower from its obligations to make
Principal Repayments.
LIMIT ON ADVANCES. Notwithstanding anything contained in this Agreement,
Lender shall have no obligation to fund any Advance for more than the
Purchase Price of an Inventory Item (other than an Additional Advance) or
if such Advance will cause the total Loan to exceed the face amount of the
Note or the maximum amount of the applicable line of credit.
NO RELIANCE BY MANUFACTURERS OR SELLERS. Lender's obligations to fund
Advances (whether in the form of paying Drafts, issuing cashiers checks or
making deposits into Borrower's account) shall be subject to all of the
terms and conditions of this Agreement, the Note and Related Documents.
Lender shall have no liability or responsibility whatsoever to any
Manufacturer, seller or any person, firm or corporation other than Borrower
for the funding of any Advances under this Agreement. Borrower understands,
however, that Lender, as an accommodation to Borrower, may have entered
into separate agreements with one or more Manufacturers and/or distributors
or sellers, to pay Drafts. Lender's payment of any such Draft shall
constitute an
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Advance under the Agreement, the Loan and the Note, notwithstanding that
such Advance may be in excess of the maximum stated amount of the
applicable line of credit.
REPRESENTATIONS AND WARRANTIES. Borrower and any Guarantor represent and warrant
to Lender as of the date of this Agreement and as of the date of each
disbursement of Loan proceeds that:
ORGANIZATION. Borrower is a corporation which is duly organized, validly
existing, and in good standing under the laws of the State of Louisiana.
LICENSE AND DEALERSHIP. Borrower is duly licensed in accordance with the
laws of the State of Louisiana and has a binding agreement with one or more
Manufacturers to purchase and sell Manufacturer's Inventory Items.
AUTHORIZATION. Borrower's and Guarantors' execution, delivery and
performance of this Agreement have been duly authorized, and to not
conflict with, and will not result in a violation of, or constitute or give
rise to a default under Borrower's Articles of Incorporation or Bylaws, or
any agreement or other instrument which may be finding upon Borrower, or
under any law or governmental regulation or court decree or order
applicable to Borrower and/or its properties. Borrower has the power and
authority to enter into the Loan and Note and to grant collateral security
therefor. Borrower has the further power and authority to own and to hold
all of its assets and properties, and to carry on its business as presently
conducted.
FINANCIAL INFORMATION. Borrower's and Guarantors' financial statements
previously furnished to Lender are and were complete and correct, and were
prepared in accordance with generally accepted accounting principles, and
fairly represent Borrower's and Guarantors' financial condition as of the
date or dates thereof. Borrower and Guarantors have no contingent
obligations or liabilities that were not disclosed by, reserved against,
and identified in said financial statements or in the notes thereto. Since
the dates of such financial statements, there have been no material adverse
change in Borrower's and Guarantors' financial condition or business.
PROPERTIES. Except as contemplated by this Agreement or as previously
disclosed in Borrower's financial statements or in writing to Lender and as
accepted by Lender, and except for property tax liens for taxes not
presently due and payable, Borrower owns and has good title to all of
Borrower's properties free and clear of all Security Interests and has not
executed any security documents or financing statements relating to such
properties. All of Borrower's properties are titled in Borrower's legal
name, and Borrower has not used, or filed a financing statement under, any
other name for at least the last five (5) years.
HAZARDOUS SUBSTANCES. Except as disclosed to and acknowledged by Lender in
writing, Borrower represents and warrants that: Borrower has no knowledge
of, or reason to believe that there has been any use, storage, disposal or
release of any hazardous waste or substance by Borrower or any prior owners
or occupants of any of the properties, or any actual or threatened
litigation or claims of any kind by any person relating to such matters.
Borrower shall not use, store, dispose of, or release any hazardous waste
or substance on, under, or about any of the properties, unless such
activity is conducted in compliance with all applicable federal, state and
local laws, regulations, and ordinances, including without limitation,
those laws, regulations and ordinances described above.
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LITIGATION. There are no suits or proceedings pending, or to the knowledge
of Borrower, threatened against or affecting Borrower or its assets, before
any court or by any governmental agency, other than those previously
disclosed to Lender in writing, which, if adversely determined, may have a
material adverse affect on Borrower's financial condition or business.
TAXES. To the best of Borrower's knowledge, all tax returns and reports of
Borrower that are or were required to be filed, have been filed, and all
taxes, assessments and other governmental charges have been paid in full,
except those presently being or to be contested by Borrower in good faith.
TAX IDENTIFICATION. Borrower has provided Lender with Borrower's correct
Federal Taxpayer Identification Number. Borrower shall promptly notify
Lender should Borrower for any reason obtain a different Federal Taxpayer
Identification Number.
LIEN PRIORITY. Unless otherwise previously disclosed to Lender in writing,
Borrower has not entered into or granted any Security Agreements, or
permitted the filing or attachment of any Security Interests on or
affecting any of the Collateral directly or indirectly securing repayment
of Borrower's Loan and Note, that would be prior or that may in any way be
superior to Lender's Security Interests and rights in and to such
Collateral.
BINDING EFFECT. This Agreement, the Note and all Security Agreements
directly or indirectly securing repayment of Borrower's Loan and Note are
binding upon Borrower as well as upon Borrower's successors,
representatives and assigns, and are legally enforceable in accordance with
their respective terms.
COMMERCIAL PURPOSE. Borrower intends to use the Loan proceeds and each
Advance hereunder solely for business or commercial related purposes.
EMPLOYEE BENEFIT PLANS. Each employee benefit plan as to which Borrower may
have any liability complies in all material respects with all applicable
requirements of law and regulations, and (i) no Reportable Event (as
defined in ERISA) has occurred with respect to any such plan, (ii) Borrower
has not withdrawn from any such plan or initiated steps to do so, and (iii)
no steps have been taken to terminate any such plan.
LOCATION OF BORROWER'S OFFICES AND COLLATERAL. The chief place of business
of Borrower and the office or offices where Borrower keeps its records
concerning the Collateral is and will be located at 13637 Airline Highway,
Baton Rouge, Louisiana, and all Inventory Items constituting Collateral
will be located at 13637 Airline Highway, Baton Rouge, Louisiana.
INFORMATION. All information heretofore or contemporaneously herewith
furnished by Borrower to Lender for the purpose of or in connection with
this Agreement or any transaction contemplated hereby is, and all
information hereafter furnished by or on behalf of Borrower to Lender will
be, true and accurate in every material respect on the date as of which
such information is dated or certified; and none of such information is or
will be incomplete by omitting to state any material fact necessary to make
such information not misleading.
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<PAGE>
SURVIVAL OF REPRESENTATION AND WARRANTIES. Borrower understands and agrees
that Lender is relying upon the above representations and warranties in
extending Loan Advances to Borrower. Borrower further agrees that the
foregoing representations and warranties shall be continuing in nature and
shall remain in full force and effect until such time as Borrower's Loan
and Note shall be paid in full, or until this Agreement shall be terminated
in the manner provided above, whichever is the last to occur.
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, so long
as this Agreement remains in effect, Borrower will:
LITIGATION. Promptly inform Lender in writing of (a) all material adverse
changes in Borrower's financial condition, and (b) all litigation and
claims and all threatened litigation and claims affecting Borrower or any
Guarantor which could materially affect the financial condition of Borrower
or the financial condition of any Guarantor.
FINANCIAL RECORDS. Maintain its books and records in accordance with
generally accepted accounting principles, applied on a consistent basis,
and permit Lender to examine and audit Borrower's books and records at all
reasonable times.
FINANCIAL REPORTS. Without demand or request by Lender, furnish Lender (i)
quarterly financial statements for Borrower and Guarantor, Travis Boats &
Motors, Inc.; (ii) within 90 days after the end of each fiscal year,
audited consolidating financial statements of the Guarantor, Travis Boats &
Motors, Inc. with the individual balance sheets and income statement of
Borrower disclosed, prepared by an independent certified public accountant
acceptable to Lender; (iii) on an annual basis, if the Loan is guaranteed
by any natural person, a financial statement of such person(s) on Lender's
form; (iv) within thirty (30) days of filing with the Internal Revenue
Service, copies of all federal income tax returns filed by Borrower and
Guarantor, Travis Boats & Motors, Inc.
ADDITIONAL INFORMATION. Furnish such additional information and statements,
lists of assets and liabilities, agings of receivables and payables,
inventory schedules, budgets, forecasts, tax returns, and other reports
with respect to Borrower's financial condition and business operations as
Lender may request from time to time.
INSURANCE. Maintain fire and other risk insurance, public liability
insurance, and such other insurance as Lender may require with respect to
Borrower's properties and operations, inform, amounts, coverages and with
insurance companies reasonably acceptable to Lender. In addition, Borrower
shall maintain comprehensive coverage insurance on the Inventory Items for
the full replacement value thereof. Borrower, upon request of Lender, will
deliver to Lender from time to time the policies or certificates of
insurance in form satisfactory to Lender, including stipulation that
coverages will not be cancelled or diminished without at least thirty (30)
days' prior written notice to Lender. In connection with all policies
coverinq assets in which Lender holds or is offered a security interest for
the Loans, Borrower will provide Lender with such Lender's loss payable or
other endorsements as Lender may require. Lender's acceptance of policies
in lesser amounts or coverages will not constitute a waiver of Borrower's
obligations to provide the insurance described above. Borrower further
grants to Lender a security interest in all insurance proceeds and
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returned unearned premiums. Borrower appoints Lender as its attorney-in-
fact to receive all insurance payments and to endorse all checks or drafts
representing such payments.
INSURANCE REPORTS. Furnish to Lender, upon request of Lender, reports on
each existing insurance policy showing such information as Lender may
reasonably request, including without limitation the following: (a) the
name of the insurer; (b) the risks insured; (c) the amount of the policy;
(d) the properties insured; (e) the then current property values on the
basis of which insurance has been obtained, and the manner of determining
those values; and (f) the expiration date of the policy. In addition,
upon request of Lender (however not more often than annually), Borrower
will have an independent appraiser satisfactory to Lender determine, as
applicable, the actual cash value or replacement cost of any Collateral.
OTHER AGREEMENTS. Comply with all terms and conditions of all other
agreements, whether now or hereafter existing, between Borrower and Lender,
including all Security Agreements, and between Borrower and any other
party, and notify Lender immediately in writing of any default in
connection with any other such agreements.
LOAN PROCEEDS. Use all Loan proceeds solely for Borrower's business
operations or as otherwise described above, unless specially consented to
the contrary by Lender in writing.
TAXES, CHARGES AND LIENS. Pay and discharge when due all of its
indebtedness and obligations, including without limitation all assessments,
taxes, governmental charges, levies and liens, of every kind and nature,
imposed upon Borrower or its properties, income or profits, prior to the
date on which penalties would attach, and all lawful claims that, if
unpaid, might become a lien or charge upon any of Borrower's properties,
income, or profits. Provided, however, Borrower will not be required to pay
and discharge any such assessment, tax, charge, levy, lien or claim so long
as (a) the legality of the same shall be contested in good faith by
appropriate proceedings, and (b) Borrower shall have established on its
books adequate reserves with respect to such contested assessment, tax,
charge, levy, lien, or claim, in accordance with generally accepted
accounting practices. Borrower, upon demand of Lender, will furnish to
Lender evidence of payment of the assessments, taxes, charges, levies,
liens and claims and will authorize the appropriate governmental official
to deliver to Lender at any time a written statement of any assessments,
taxes, charges, levies, liens and claims against Borrower's properties,
income, or profits.
PERFORMANCE. Perform and comply with all terms, conditions and provisions
set forth in this Agreement and in all other instruments and agreements
between Borrower and Lender in a timely manner, and promptly notify Lender
if Borrower learns of the occurrence of any event which constitutes an
Event of Default under this Agreement.
OPERATIONS. Substantially maintain its present executive and management
personnel; conduct its business affairs in a reasonable and prudent manner
and in compliance with all applicable federal, state and municipal laws,
ordinances, rules and regulations respecting its properties, charters,
businesses and operations, including compliance with all minimum funding
standards and other requirements of the Employee Retirement Income Security
Act of 1974, as amended, and other laws applicable to Borrower's employee
benefit plans.
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<PAGE>
INSPECTION AND AUDITS. Permit employees or agents of Lender at any
reasonable time, with or without notice and as frequently as Lender may
deem appropriate, to inspect and/or audit any and all Collateral and
Borrower's other properties and to examine or audit Borrower's books,
accounts, and records and to make copies and memoranda of Borrower's books,
accounts, and records. If Borrower now or at any time hereafter maintains
any records (including without limitation computer generated records and
computer software programs for the generation of such records) in the
possession of a third party, Borrower upon request of Lender, shall notify
such party to permit Lender free access to such records at all reasonable
times and to provide Lender with copies of any records it may reasonably
request, all at Borrower's expense.
CHANGE OF LOCATION OR NAME. Immediately notify Lender in writing of any
additions to or changes in the location of the Collateral or of Borrower's
businesses, or any change in Borrower's corporate name or trade name. To
the extent that the Collateral consists of boats and/or trailers, Borrower
shall not take or permit any action which would require registration of the
boats and/or trailers outside the State of Louisiana, without the prior
written consent of the Lender.
TITLE TO ASSETS AND PROPERTY. Maintain good and marketable title to all of
the Collateral, subject to no Security Interests except those in favor of
Lender.
NOTICE OF DEFAULT, LITIGATION AND ERISA MATTERS. Forthwith upon learning of
the occurrence of any of the following, Borrower shall provide Lender with
written notice thereof, describing the same and the steps being taken by
Borrower with respect thereto: (i) the occurrence of any Event of Default,
or (ii) the institution of, or any adverse determination in, any
litigation, arbitration proceeding or governmental proceedings, or (iii)
the occurrence of a Reportable Event under, or the institution of steps by
Borrower to withdraw from, or the institution of any steps to terminate,
any employee benefit plan as to which Borrower may have any liability.
EMPLOYEE BENEFIT PLANS. Maintain each employee benefit plan as to which it
may have any liability, in compliance with all applicable requirements of
law and regulations.
BONUSES AND DIVIDENDS. Subordinate payment of bonuses and/or dividends to
Borrower's employees or stockholders to payment of the Loan and Note, and
the Borrower shall not pay any such bonuses or dividends if an Event of
Default occurs and is continuing.
OTHER AGREEMENTS. Not enter into any agreement containing any provision
which would be violated or breached by the performance of its obligations
hereunder or under any instrument or document delivered or to be delivered
by it hereunder or in connection herewith.
COMPLIANCE CERTIFICATE. Provide Lender at least annually and at such other
times as Lender may, in its sole discretion, elect with a certificate
executed by Borrower's chief financial officer, or other officer or person
acceptable to Lender, certifying that the representations and warranties
set forth in this Agreement are true and correct as of the date of the
certificate and further certifying that, as of the date of the certificate,
no Event of Default exists under this Agreement.
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ADDITIONAL ASSURANCES. Make, execute and deliver to Lender such promissory
notes, mortgages, deeds of trust, security agreements, financing
statements, instruments, documents and other agreements as Lender or its
attorneys may reasonably request to evidence and secure the Loans and to
perfect all Security Interests.
CONDITION OF COLLATERAL. Maintain the Collateral in good operating
condition, repair and appearance. The Collateral will not be used for any
purpose other than demonstration at Borrower's place(s) of business set
forth above.
ORGANIZATION. Maintain Borrower as a separate corporation, agreeing not to
merge or consolidate with any other corporation and agreeing not to permit
any material change in the ownership of Borrower.
BANKING RELATIONSHIP. Maintain Borrower's primary depository banking
relationship with Lender. Borrower to maintain a minimum net free
compensating balance of $50,000.00 on an annual basis. A fee will be
charged at a rate of Citibank Prime plus 1% for any deficiency.
NEGATIVE COVENANTS. Borrower covenants and agrees with lender that as long as
this Agreement remains in effect, Borrower shall not, without the prior written
consent of Lender:
INDEBTEDNESS AND LIENS. (a) Except for trade debt incurred in the normal
course of business and indebtedness to Lender contemplated by this
Agreement, incur indebtedness for borrowed money in excess of $50,000, (b)
mortgage, assign pledge, lease, grant a security interest in, or encumber
(or permit any lien to exist) any of the Collateral, (c) sell with
recourse any of Borrower's accounts, except to Lender, or (d) sell any
Collateral (except for sales in the ordinary course of business, and then
only if the portion of the proceeds required to be paid to Lender is
promptly remitted to Lender).
CONTINUITY OF OPERATIONS. (a) Engage in any business activities
substantially different from those in which Borrower is presently engaged,
(b) cease operations, liquidate, merge or consolidate with any other
entity, (c) materially alter or amend Borrower's capital structure, or (d)
dispose of all or any material portion of Borrower's assets.
LOANS, ACQUISITIONS AND GUARANTIES. (a) Loan money or assets (b) purchase
or acquire any interest in any other enterprise or entity or (c) incur any
obligation as surety or guarantor other than in the ordinary course of
business.
DEPOSIT ACCOUNTS. As collateral security for repayment of Borrower's Note and
all renewals and extensions, as well as to secure any and all other loans,
notes, indebtedness and obligations that borrower (or any of them) may now and
in the future owe to Lender or incur in Lender's favor, whether direct or
indirect, absolute or contingent due or to become due, of any nature and kind
whatsoever (with the exception of any indebtedness under a consumer credit card
account), Borrower is granting Lender a continuing security interest in any and
all funds that Borrower may now and in the future have on deposit with Lender or
in certificates of deposit or other deposit accounts as to which Borrower is an
account holder (with the exception of IRA, pension, and other tax-deferred
deposits). Borrower further agrees that, in the event of default under this
Agreement, Lender may at any time apply any funds that Borrower may have on
deposit with Lender or in certificates of deposit or other deposit accounts as
to which Borrower is an account holder against the unpaid balance of Borrower's
Note and any and all
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other present and future indebtedness and obligations that Borrower (or any of
them) may then owe to Lender, in principal, interest, fees, costs, expenses, and
attorneys' fees.
EVENTS OF DEFAULT. The following actions or inactions or both shall constitute
Events of Default under this Agreement:
DEFAULT UNDER THE INDEBTEDNESS. Should Borrower default in the payment OF
principal or interest under any of the Indebtedness.
DEFAULT UNDER THIS AGREEMENT. Should Borrower violate, or fail to comply
fully with any of the terms and conditions of, or default under this
Agreement.
DEFAULT UNDER OTHER AGREEMENTS. Should any event of default occur or exist
under the Security Agreement or any other Related Document which directly
or indirectly secures repayment of any of the Indebtedness.
OTHER DEFAULTS IN FAVOR OF LENDER. Should Borrower or any Guarantor default
under any other loan, extension of credit, security agreement, or
obligation in favor of Lender.
DEFAULT IN FAVOR OF THIRD PARTIES. Should Borrower or any Guarantor default
under any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or person
that may materially affect any of Borrower's property, or Borrower's or
any Guarantor's ability to perform their respective obligations under this
Agreement, or any Related Document, or pertaining to the indebtedness.
DEFAULT BY GUARANTOR. Should the Guarantor default under the terms and
conditions of Guarantor's Guaranty of the Note and the Loan.
INSOLVENCY OR DEATH. Should the suspension, failure or insolvency, however
evidenced, of Borrower or any Guarantor occur or exist, including the
conduct of any "liquidation" or "going out of business sale," or should any
Guarantor die.
READJUSTMENT OF INDEBTEDNESS. Should proceedings for readjustment of
indebtedness, reorganization, composition or extension under any insolvency
law be brought by or against Borrower or any Guarantor.
ASSIGNMENT FOR BENEFIT OF CREDITORS. Should Borrower or any Guarantor file
proceedings for a respite or make a general assignment for the benefit of
creditors.
RECEIVERSHIP. Should a receiver of all or any part of Borrower's property,
or the property of any Guarantor, be applied for or appointed.
DISSOLUTION PROCEEDINGS. Should proceedings for the dissolution or
appointment of a liquidator of Borrower or any Guarantor be commenced.
FALSE STATEMENTS. Should any representation or warranty of Borrower or any
Guarantor made in connection with the Loan prove to be incorrect or
misleading in any respect.
LICENSE OR DEALERSHIP REVOCATION. Should the Borrower's license to operate
as a dealer be suspended, revoked or expire (without timely renewal) or
should Borrower's contractual right to operate as a dealer for any
Manufacturer be suspended, revoked or expire (without timely renewal).
Borrower may discontinue to do business with a
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<PAGE>
Manufacturer and it will not be a default under this Agreement provided the
prior written consent of Lender is obtained.
MATERIAL ADVERSE CHANGE. Should a material adverse change occur in the
condition (financial or otherwise) of the Borrower or any Guarantor.
CHANGE IN CONTROL. Should there be a material change in the beneficial
ownership of the Borrower without the Lender's prior written consent.
INSECURITY. Should Lender deem itself to be insecure with regard to
repayment of the Loan.
Notwithstanding any of the foregoing provisions prior to Lender declaring
Borrower in default hereunder or under the Loan, Lender agrees to give
Borrower written notice of any such default, and Borrower shall have ten
(10) days within which to cure a monetary default, or thirty (30) days
within which to cure a non-monetary default from the date Lender's written
notice is given, except in the event that Borrower fails to timely repay
the Amount Financed on the sale of Inventory and then still fails to
immediately make payment thereof in full upon demand by Lender, in that
event Borrower shall not be entitled to any further notice or grace period
to cure such default and Lender may declare Borrower in default and
exercise all rights and remedies provided herein or by law. Notices shall
be given to Borrower and to Guarantor, Travis Boats & Motors, Inc., at 9185
Research Boulevard, Austin, Texas, 78758.
EFFECT OF AN EVENT OF DEFAULT. If any Event of Default by Borrower, by
Guarantor, Travis Boats & Motors, Inc., or by any two or more individual
Guarantors, shall occur, all commitments and obligations of Lender under this
Agreement or the Related Documents or any other agreement immediately will
terminate (including any obligation to make further Loan Advances or
disbursements), and, at Lender's option, all Loans immediately will become due
and payable, all without notice of any kind to Borrower, except that in the case
of an Event of Default of the type described in the "Insolvency" subsection
above, such acceleration shall be automatic and not optional.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:
AUDITS. Borrower agrees to pay the costs of or a maximum of ten (10)
Inventory Audits per calendar year. Payments for audit costs will be due
within 30 days of each audit. Notwithstanding the above, if any audit is
deemed to be unsatisfactory by Lender, Borrower agrees to pay the costs for
additional audits as deemed necessary by Lender.
AMENDMENTS. This Agreement, together with the Note, the Security Agreement
and any Related Documents, constitutes the entire understanding and
agreement of the parties as to the matters set forth in this Agreement. No
alteration of or amendment to this Agreement shall be effective unless
given in writing and signed by party or parties sought to be charged or
bound by the alteration or amendment.
APPLICABLE LAW. This Agreement has been delivered to Lender and accepted by
Lender in the State of Louisiana. Lender and Borrower hereby waive the
right to any jury trial in any action, proceeding, or counterclaim brought
by either Lender or Borrower against the other. This Agreement shall be
governed by and construed in accordance with the laws of the State of
Louisiana.
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<PAGE>
CAPTION HEADINGS. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions
of this Agreement.
CONSENT TO LOAN PARTICIPATION. Borrower agrees and consents to Lender's
sale or transfer, whether now or later, of one or more participation
interests in the Loans to one or more purchasers, whether related or
unrelated to Lender. Lender may provide, without any limitation whatsoever,
to any one or more purchasers, or potential purchasers, any information or
knowledge Lender may have about Borrower or about any other matter relating
to the Loan, and Borrower hereby waives any rights to privacy it may have
with respect to such matters. Borrower additionally waives any and all
notices of sale of participation interests, as well as all notices of any
repurchase of such participation interests. Borrower also agrees that the
purchasers of any such participation interests will be considered as the
absolute owners of such interests in the Loans and will have all the rights
granted under the participation agreement or agreements governing the sale
of such participation interests. Borrower further waives all rights of
offset or counterclaim that it may have now or later against Lender or
against any purchaser of such a participation interest and unconditionally
agrees that either Lender or such purchaser may enforce Borrower's
obligation under the Loans irrespective of the failure or insolvency of any
holder of any interest in the Loans. Borrower further agrees that the
purchaser of any such participation interests may enforce its interests
irrespective of any personal claims or defenses that Borrower may have
against Lender.
COSTS AND EXPENSES. Borrower agrees to pay upon demand all of Lender's out
of-pocket expenses, including attorneys' fees, incurred in connection with
this Agreement or in connection with the Loans made pursuant to this
Agreement. Lender may pay someone else to help collect the Loans and to
enforce this Agreement, and Borrower will pay that amount. This includes,
subject to any limits under applicable law, Lender's attorneys' fees and
legal expenses, whether or not there is a lawsuit, including attorneys'
fees for bankruptcy proceedings (including efforts to modify or vacate any
automatic stay or injunction), appeals, and any anticipated post-judgment
collection services. Borrower also will pay any court costs, in addition to
all other sums provided by law.
NOTICES. To give Borrower any notice required under this Agreement, Lender
may hand deliver or mail such notice to Borrower. Lender will deliver or
mail any notice to Borrower at the following address (or any address which
Borrower may have given Lender by written notice as provided in this
paragraph):
BORROWER'S ADDRESS: 13637 Airline Highway,
Baton Rouge, LA 70817
In the event that there is more than one Borrower under this Agreement,
notice to a single Borrower shall be considered as notice to all Borrowers.
To give Lender any notice under this Agreement, Borrower (or any Borrower)
shall mail the notice to Lender by registered or certified mail at the
following address (or at any other address that Lender may have given to
Borrower by written notice as provided in this paragraph):
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LENDER'S ADDRESS: 440 Third Street
Baton Rouge, LA 70801
Attn: Michelle A. Carriere
All notices required or permitted under this Agreement must be in writing
and will be considered as given on the day it is delivered by hand or
deposited in the U.S. Mail, by registered or certified mail to the address
specified in this Agreement.
SEVERABILITY. If a court of competent jurisdiction finds any provision of
this Agreement to be invalid or unenforceable as to any person or
circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible, any
such offending provision shall be deemed to be modified to be within the
limits of enforceability or validity; however, if the offending provision
cannot be so modified, it shall be stricken and all other provisions of
this Agreement in all other respects shall remain valid and enforceable.
SOLE DISCRETION OF LENDER. Whenever Lender's consent or approval is
required under this Agreement, the decision as to whether or not to consent
or approve shall be in the sole and exclusive discretion of Lender and
Lender's decision shall be final and conclusive.
SUBSIDIARIES AND AFFILIATES OF BORROWER. To the extent the context of any
provisions of this Agreement makes it appropriate, including without
limitation any representation, warranty or covenant, the word "Borrower"
as used herein shall include all subsidiaries and affiliates of Borrower.
Notwithstanding the foregoing, however, under no circumstances shall this
Agreement be construed to require Lender to make any Loan or other
financial accommodation to any subsidiary or affiliate of Borrower.
SUCCESSORS AND ASSIGNS. All covenants and agreements contained by or on
behalf of Borrower shall bind its successors and assigns and shall inure to
the benefit of Lender, its successors and assigns. Borrower shall not,
however, have the right to assign its rights under this Agreement or any
interest therein, without the prior written consent of Lender.
SURVIVAL. All warranties, representations, and covenants made by Borrower
in this Agreement or in any certificate or other instrument delivered by
Borrower to Lender under this Agreement shall be considered to have been
relied upon by Lender and will survive the making of the Loan and delivery
to Lender of the Related Documents, regardless of any investigation made by
Lender or on Lender's behalf.
WAIVER. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in writing and signed by Lender. No
delay or omission on the part of Lender in exercising any right shall
operate as a waiver of such right or any other right. A waiver by Lender of
a provision of this Agreement shall not prejudice or constitute a waiver of
Lender's right otherwise to demand strict compliance with that provision
or any other provision of this Agreement. No prior waiver by Lender, nor
any course of dealing between Lender and Borrower, or between Lender and
any Guarantor, shall constitute a waiver of any of Lender's rights or of
any obligations of Borrower or of any Guarantor as to any future
transactions. Whenever the consent of Lender is required under this
Agreement, the granting of such consent by Lender in any instance shall not
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constitute continuing consent in subsequent instances where such consent is
required and in all cases, such consent may be granted or withheld in the
sole discretion of Lender.
This Agreement may be signed in counterparts which shall be construed as one
agreement, when signed by all parties, and effective as of December 17, 1992.
BORROWER AND GUARANTOR ACKNOWLEDGE HAVING READ ALL THE PROVISIONS OF THIS
INVENTORY LOAN AGREEMENT, AND BORROWER AND GUARANTOR AGREE TO ITS TERMS. THIS
AGREEMENT IS DATED AS OF DECEMBER 17, 1992.
BORROWER:
TRAVIS BOATS & MOTORS BATON ROUGE. INC
BY:SIGNATURE ILLEGIBLE
-----------------------
GUARANTOR(S):
/s/ E.D.BOHLS /s/ RONNIE L. SPRADLING
- -------------------------- ----------------------------
E.D. BOHLS RONNIE L. SPRADLING
/s/ ROBERT C. SIDDONS
- -------------------------- ____________________________
ROBERTS C. SIDDONS JESSE C. COX
/s/ JOE E. SIMPSON /s/ MARK T. WALTON
- -------------------------- ----------------------------
JOE E. SIMPSON MARK T. WALTON
TRAVIS BOATS & MOTORS, INC.
By: [SIGNATURE ILLEGIBLE]
---------------------
LENDER:
HIBERNIA NATIONAL BANK
By: [SIGNATURE ILLEGIBLE]
---------------------
Authorized Officer
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constitute continuing consent in subsequent instances where such consent is
required and in all cases, such consent may be granted or withheld in the
sale discretion of Lender.
This Agreement may be signed in counterparts which shall be construed as one
agreement, when signed by all parties, and effective as of December 17, 1992.
BORROWER AND GUARANTOR ACKNOWLEDGE HAVING READ ALL THE PROVISIONS OF THIS
INVENTORY LOAN AGREEMENT, AND BORROWER AND GUARANTOR AGREE TO ITS TERMS. THIS
AGREEMENT IS DATED AS OF DECEMBER 17, 1992.
BORROWER:
TRAVIS BOATS & MOTORS BATON ROUGE, INC.
BY:_______________________
GUARANTOR(S):
__________________________ ____________________________
E. D. BOHLS RONNIE L. SPRADLING
/s/ Jesse C. Cox
__________________________ ----------------------------
ROBERT C. SIDDONS JESSE C. COX
__________________________ ____________________________
JOE E. SIMPSON MARK T. WALTON
TRAVIS BOATS & MOTORS, INC.
BY:_______________________
LENDER:
HIBERNIA NATIONAL BANK
BY:_______________________
Authorized Officer
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FIRST AMENDMENT TO INVENTORY LOAN AGREEMENT
WHEREAS, Travis Boats & Motors Baton Rouge, Inc. ("Borrower") and Hibernia
National Bank ("Lender) have entered into that certain Inventory Loan Agreement
effective as of December 17, 1992 ("the Agreement"); and
WHEREAS, Borrower and Lender desire to amend the Agreement, and they agree
as follows:
1. The Agreement is hereby amended to change the amount "$650,000.00" in
each place where it appears in the Agreement (Particularly in the paragraphs
designated "BORROWER'S LOAN" and "INVENTORY LOANS") to the amount
"$800,000.00."
2. Except as expressly modified in this Amendment, all terms and provisions
of the Agreement are hereby ratified and confirmed, and shall be and shall
remain in full force and effect, enforceable in accordance with their terms.
Executed as of the 7th day of February, 1994.
BORROWER:
TRAVIS BOATS & MOTORS BATON ROUGE, INC.
By: /s/ Jim McManus
-----------------------
Cornelius James McManus
a/k/a Jim McManus
Vice President
<PAGE>
EXHIBIT 10.10(a)
AMENDED AND RESTATED LOAN AGREEMENT
-----------------------------------
THIS AMENDED AND RESTATED LOAN AGREEMENT (this "Agreement") is entered into
to be effective as of the 15th day of September, 1995, by and among TRAVIS BOATS
& MOTORS, INC., a Texas corporation, FALCON MARINE, INC., a Texas corporation,
FALCON MARINE ABILENE, INC., a Texas corporation, TRAVIS SNOWDEN MARINE, INC., a
Texas corporation, TRAVIS BOATING CENTER BEAUMONT, INC., a Texas corporation,
and TRAVIS BOATING CENTER ARLINGTON, INC., a Texas corporation (collectively
referred to herein as "Borrower"), and NATIONSBANK OF TEXAS, N.A. ("Lender").
W I T N E S S E T H:
--------------------
WHEREAS, Borrower and Lender entered into that one certain Amended and
Restated Loan Agreement (the "Loan Agreement") dated as of January 7, 1995,
setting forth the terms of certain credit facilities more fully described
therein;
WHEREAS, Borrower and Lender desire to amend and restate the Loan
Agreement, and this Agreement constitutes the Amended and Restated Loan
Agreement which henceforth shall govern the credit facilities described herein
and in the Loan Agreement;
NOW, THEREFORE, in consideration of the mutual covenants, agreements and
undertakings herein contained, Lender and Borrower hereby agree as follows:
1. Definitions.
-----------
Terms defined in the attached Glossary and not defined herein shall have
the meanings therein set forth.
2. The Loans.
---------
2.1 Revolving Credit Facility #1.
----------------------------
(a) Revolving Credit Facility #1 Loan. Subject to the terms and conditions
---------------------------------
hereof, the Lender agrees to extend to the Borrower a revolving credit facility
hereunder (hereinafter referred to as "Revolving Credit Facility #1") and to
make Revolving Loans to the Borrower from time to time, not to exceed, in the
aggregate, at any one time for Revolving Credit Facility #1, the lesser of (i)
Borrowing Base #1 (as hereinafter defined) or (ii) $7,500,000.00. The Borrower
shall have the right to borrow, repay and re-borrow under Revolving Credit
Facility #1. Revolving Credit Facility #1 shall be evidenced by a Promissory
Note evidencing the indebtedness under Revolving Credit Facility #1 ("Revolving
Note #1") in form and substance acceptable to Lender. The proceeds of the
Revolving Loans disbursed under Revolving Credit Facility #1 shall be used
solely for working capital support for the purchase of new boats, motors and
trailers by the Borrower.
================================================================================
<PAGE>
(b) Borrowing Base #1. As used herein, the term "Borrowing Base #1"
-----------------
shall mean 100% of the cost (as evidenced by manufacturer invoices) of eligible
new boats, motors and trailers (as defined below) located at the time of
determination of said Borrowing Base #1 at either (i) the San Antonio, Texas,
sales facility or storage facility operated by the Borrower (hereinafter the
"San Antonio Location"), (ii) the Austin, Texas, sales facility or storage
facility operated by the Borrower (hereinafter the "Austin Location"), (iii) the
Houston, Texas, sales facility or storage facility operated by the Borrower
(hereinafter the "Houston Location"), (iv) the Midland, Texas, sales facility or
storage facility operated by the Borrower (hereinafter the "Midland Location"),
(v) the Abilene, Texas, sales facility or storage facility operated by the
Borrower (hereinafter the "Abilene Location"), (vi) the Dallas, Texas, sales
facility or storage facility operated by the Borrower (hereinafter the "Dallas
Location"), (vii) the Beaumont, Texas, sales facility or storage facility
operated by the Borrower (hereinafter the "Beaumont Location"), or (viii) the
Arlington, Texas, sales facility or storage facility operated by the Borrower
(hereinafter the "Arlington Location"), or (ix) either of the two (2) Amarillo,
Texas sales facilities or storage facilities operated by persons with whom
Borrower has entered into consignment agreements approved by Lender (the
"Amarillo Consignment Locations").
(c) Eligible Boats, Motors and Trailers. As used herein the term "eligible
-----------------------------------
boats, motors and trailers" shall mean all new boats, motors and trailers of
product lines (i.e., brand names) not subject to (whether in whole or in part) a
purchase money security interest in favor of a third party creditor. Without the
prior written consent of the Lender, the existence of a third party purchase
money security interest covering any individual item or any group of items of a
product line shall render the entire product line ineligible for borrowing under
Revolving Credit Facility #1. As soon as available, and in any event within
fifteen (15) days after the end of each calendar quarter, and more often if
requested by Lender as a condition to any Loan advance, the Borrower shall
furnish the Lender with a certificate specifying any product lines covered in
whole or in part by a purchase money security interest in favor of a third
party. New boats, motors and/or trailers that would otherwise be ineligible
boats, motors and/or trailers because of the existence of a purchase money
security interest held by a third party covering an item or items of the same
product line as such boats, motors and trailers may nevertheless be eligible to
be included in Borrowing Base #1 if such third party executes an agreement in
form and substance satisfactory to Lender confirming that Lender's security
interest in such boats, motors and/or trailers is superior to any security
interest held by such third party (such an agreement being referred to herein as
an "Intercreditor Agreement"). No boat, motor or trailer of Borrower located at
either of the Amarillo Consignment Locations shall be an eligible boat, motor or
trailer until Lender has received documents, instruments and information
satisfactory to Lender establishing and confirming that Lender's lien on
Borrower's boats, motors and trailers located at either of the Amarillo
Consignment Locations is a first lien
2
<PAGE>
not subject or subordinate to the lien of any landlord or secured creditor of
any consignee.
(d) Advances Under Revolving Credit Facility #l. In addition to the
-------------------------------------------
matters described in Sections 3.1 and 3.2 hereof, the obligation of the Lender
to make any Loan advance under Revolving Credit Facility #1 shall be subject to
the Lender having received from the Borrower in Proper Form (i) a written
advance request (which may be by facsimile transmission) setting forth the
amount of the requested advance and setting forth which location (i.e. the San
Antonio Location, the Austin Location, the Houston Location, the Midland
Location, the Abilene Location, the Dallas Location, the Beaumont Location, the
Arlington Location or one of the Amarillo Consignment Locations) where the new
eligible boat, motor or trailer that is to be acquired with the Loan proceeds is
to be located, and (ii) within forty-eight hours after receipt of such request,
a copy of the Manufacturer's Statement of Origin ("MSO") and a manufacturer's
invoice covering the new eligible boat, motor or trailer that is to be acquired
with the Loan proceeds. The advance request shall be in an amount not to exceed
the amount set forth in the manufacturer's invoice for such new eligible boat,
motor or trailer. Borrower shall, upon request of Lender, deliver to Lender the
original of such MSO, and Lender or a person designated by Lender shall be
allowed access to all of Borrower's MSO's during normal business hours without
prior notice.
(e) Mandatory Prepayment. Borrower shall make the following prepayments
--------------------
on Revolving Note #1:
(i) Prepayments upon the Sale or Disposition of Boat, Motor and/or
--------------------------------------------------------------
Trailer. Borrower shall make a prepayment on Revolving Note #1 upon the sale,
- -------
disposition or destruction of any boat, motor and/or trailer for which an
advance was made under Revolving Credit Facility #1 or under any loan taken up,
renewed, extended by, or paid off with the proceeds of, Revolving Credit
Facility #1, such prepayment to be in an amount equal to the amount of such
advance, less any prepayments previously made with respect to such advance
pursuant to subsections (ii), (iv), (v) or (vi) hereof or otherwise.
(ii) Curtailment Prepayments. For each boat, motor or trailer for
-----------------------
which an advance was made under Revolving Credit Facility #1 or under any loan
taken up, renewed, extended by, or paid off with the proceeds of, Revolving
Credit Facility #1, which remains financed under Revolving Credit Facility #1
(i.e., no prepayment or prepayments have previously been made pertaining to such
advance in the amount of such advance) at the times set forth below, Borrower
shall make prepayments to Revolving Note #1 in the following amounts (each such
amount being referred to herein as a "Curtailment Amount"):
3
<PAGE>
A. five percent (5%) of the amount of such advance if such
boat, motor or trailer remains financed under Revolving Credit Facility #1 one
year from the date of such advance;
B. three percent (3%) of the amount of such advance if such
boat, motor or trailer remains financed under Revolving Credit Facility #1 one
year and 90 days from the date of such advance;
C. three percent (3%) of the amount of such advance if such
boat, motor or trailer remains financed under Revolving Credit Facility #1 one
year and 180 days from the date of such advance;
D. three percent (3%) of the amount of such advance if such
boat, motor or trailer remains financed under Revolving Credit Facility #1 one
year and 270 days from the date of such advance;
E. eighty-six percent (86%) of the amount of such advance if
such boat, motor or trailer remains financed under Revolving Credit Facility #1
two years from the date of such advance.
Each Curtailment Amount imposed under this subsection (ii) shall reduce
Borrowing Base #1 by an amount equal to such Curtailment Amount. Lender shall
send Borrower notice of Borrower's prepayment obligation under this subsection
(ii) on a calendar quarterly basis setting forth the prepayment obligations
under this subsection (ii) for the quarter to which such notice pertains.
Prepayments set forth in each such notice shall be due and payable upon receipt
of such notice by Borrower.
(iii) Excess Balance Prepayments. If the unpaid balance of the
--------------------------
Revolving Note #1 at any time exceeds the Borrowing Base #1 then in effect, the
Borrower shall within ten (10) business days make a prepayment on the Revolving
Note #1 in an amount sufficient to reduce the aggregate unpaid balance of the
Revolving Note #1 to an amount no greater than the Borrowing Base #1.
(iv) Prepayments Due to Third Party Security Interests. Should
-------------------------------------------------
Borrower, without Lender's prior written consent, cause or allow to exist a
third party purchase money security interest covering any item (i.e., boat,
motor or trailer) or any group of items of a product line in which said product
line also is in part or in whole financed under Revolving Note #1, the Borrower
shall within ten (10) business days make a prepayment on Revolving Note #1 in an
amount equal to the sum of all advances made for items of said product line not
covered by an Intercreditor Agreement executed by the holder of such third party
purchase money security interest, less any prepayments previously made with
respect to such advances.
4
<PAGE>
(v) Prepayments Due to Missing Boat, Motor or Trailer. If Lender
-------------------------------------------------
discovers, through an inspection of Borrower's Property or otherwise, that a
boat, motor or trailer for which an advance was made under Revolving Credit
Facility #1 or under one of the Prior Revolving Loans is not at the San Antonio
Location, the Austin Location, the Houston Location, the Midland Location, the
Abilene Location, the Dallas Location, the Beaumont Location, the Arlington
Location or one of the Amarillo Consignment Locations, Borrower shall make a
prepayment on Revolving Note #1 in an amount equal to the amount of such
advance, less any prepayments previously made with respect to such advance
pursuant to subsections (i), (ii), (iv) or (vi) hereof or otherwise. Such
prepayment must be made by Borrower within forty-eight (48) hours of receipt of
notice from Lender of such missing boat, motor or trailer.
(vi) Prepayments for Inventory in Excess of $200,000.00 Remaining
------------------------------------------------------------
Financed More Than One Year. In the event that the aggregate amount financed
- ---------------------------
under Revolving Credit Facility #1 exceeds $200,000.00 for boats, motors and
trailers which remain financed under Revolving Credit Facility #1 one year or
more after the advances were made for such boats, motors or trailers under
Revolving Credit Facility #1 or under any previous revolving loan between Lender
and one or more of the companies comprising Borrower, Borrowing Base #1 shall be
reduced by the amount of such excess, and Borrower shall make three (3) monthly
prepayments to Revolving Note #1, each in an amount equal to one-third (1/3) of
the amount of such excess, with such payments being applied to the repayment of
such advances which have been outstanding for the longest period of time. Lender
shall send Borrower notice of Borrower's prepayment obligation under this
subsection (vi) on a calendar quarterly basis setting forth the prepayment
obligations under this subsection (vi). The monthly prepayments provided for
under this subsection (vi) shall be due and payable on the first day of each of
the three (3) months immediately succeeding the month in which such notice is
given to Borrower.
2.2 Revolving Credit Facility #2.
----------------------------
(a) Revolving Credit Facility #2 Loan. Subject to the terms and conditions
---------------------------------
hereof, the Lender agrees to extend to the Borrower a revolving credit facility
hereunder (hereinafter referred to as the "Revolving Credit Facility #2") and to
make Revolving Loans to the Borrower from time to time, not to exceed, in the
aggregate at any one time for Revolving Credit Facility #2, the lesser of (i)
Borrowing Base #2 (as hereinafter defined) or (ii) the Revolving Credit Facility
#2 Cap (as defined hereinafter). The "Revolving Credit Facility #2 Cap" shall be
$500,000.00. The Borrower shall have the right to borrow, repay and re-borrow
under Revolving Credit Facility #2. Revolving Credit Facility #2 shall be
evidenced by a Promissory Note evidencing the indebtedness under Revolving
Credit Facility #2 ("Revolving Note #2") in form and substance acceptable to
Lender. The proceeds of the Revolving Loans disbursed under Revolving Credit
Facility #2 shall be used
5
<PAGE>
solely for working capital support for the purchase of parts and accessories by
the Borrower.
(b) Borrowing Base #2. As used herein the term "Borrowing Base #2" shall
-----------------
mean 50% of the cost of new parts and accessories located at the time of the
determination of said Borrowing Base #2 at either (i) the San Antonio Location,
(ii) the Austin Location, (iii) the Houston Location, (iv) the Midland Location,
(v) the Abilene Location, (vi) the Dallas Location, (vii) the Beaumont Location,
or (viii) the Arlington Location, which are not covered by a purchase money
security interest in favor of a third party.
(c) Mandatory Prepayment. If the unpaid balance of Revolving Note #2 at
--------------------
any time exceeds the Borrowing Base #2 then in effect, the Borrower shall within
ten (10) business days make a prepayment on Revolving Note #2 in an amount
sufficient to reduce the aggregate unpaid balance of Revolving Note #2 to an
amount no greater than Borrowing Base #2.
(d) Resting Period for Revolving Credit Facility #2. While this Loan
-----------------------------------------------
Agreement is in effect, there shall be no outstanding balance under Revolving
Credit Facility #2 for at least thirty (30) consecutive days during each fiscal
year of Borrower.
2.3 Revolving Credit Facility #3.
----------------------------
(a) Revolving Credit Facility #3 Loans. Subject to the terms and
----------------------------------
conditions hereof, the Lender agrees to extend to the Borrower eight revolving
credit facilities hereunder (hereinafter referred to as the "San Antonio
Revolving Credit Facility #3", the "Austin Revolving Credit Facility #3", the
"Houston Revolving Credit Facility #3", the "Midland Revolving Credit Facility
#3", the "Abilene Revolving Credit Facility #3", the "Dallas Revolving Credit
Facility #3", the "Beaumont Revolving Credit Facility #3", and the "Arlington
Revolving Credit Facility #3, and said eight credit facilities collectively
referred to herein as "Revolving Credit Facility #3"), and to make advances to
the Borrower from time to time, not to exceed, in the aggregate at any one time,
$75,000.00 for the San Antonio Revolving Credit Facility #3 (the "San Antonio
Revolving Credit Facility #3 Cap"), $75,000.00 for the Austin Revolving Credit
Facility #3 (the "Austin Revolving Credit Facility #3 Cap"), $175,000.00 for the
Houston Revolving Credit Facility #3 (the "Houston Revolving Credit Facility #3
Cap"), $75,000.00 for the Midland Revolving Credit Facility #3 (the "Midland
Revolving Credit Facility #3 Cap"), $75,000.00 for the Abilene Revolving Credit
Facility #3 (the "Abilene Revolving Credit Facility #3 Cap"), $75,000.00 for the
Dallas Revolving Credit Facility #3 (the "Dallas Revolving Credit Facility #3
Cap"), $75,000.00 for the Beaumont Revolving Credit Facility #3 (the "Beaumont
Revolving Credit Facility #3 Cap"), and $75,000.00 for the Arlington Revolving
Credit Facility #3 (the "Arlington Revolving Credit Facility #3 Cap"). The
Revolving Credit Facility #3 shall be used
6
<PAGE>
solely to provide immediate provisional credit for drafts arising out of the
sale of boats, motors and/or trailers which are deposited in Borrower's demand
account or accounts with Lender.
(b) Advances on Revolving Credit Facility #3. Each time Borrower
----------------------------------------
deposits a draft arising out of the sale of a boat, motor and/or trailer at the
San Antonio Location in Borrower's demand account or accounts with Lender, there
shall be an advance made under the San Antonio Revolving Credit Facility #3 in
an amount equal to the amount of such draft, provided that the aggregate of such
advances which have been made but not yet repaid shall not exceed $75,000.00,
and Borrower shall then have immediate provisional credit for such draft in the
account into which such draft is deposited to the extent of such advance. Each
time Borrower deposits a draft arising out of the sale of a boat, motor and/or
trailer at the Austin Location in Borrower's demand account or accounts with
Lender, there shall be an advance made under the Austin Revolving Credit
Facility #3 in an amount equal to the amount of such draft, provided that the
aggregate of such advances which have been made but not yet repaid shall not
exceed $75,000.00, and Borrower shall then have immediate provisional credit for
such draft in the account into which such draft is deposited to the extent of
such advance. Each time Borrower deposits a draft arising out of the sale of a
boat, motor and/or trailer at the Houston Location in Borrower's demand account
or accounts with Lender, there shall be an advance made under the Houston
Revolving Credit Facility #3 in an amount equal to the amount of such draft,
provided that the aggregate of such advances which have been made but not yet
repaid shall not exceed $175,000.00, and Borrower shall then have immediate
provisional credit for such draft in the account into which such draft is
deposited to the extent of such advance. Each time Borrower deposits a draft
arising out of the sale of a boat, motor and/or trailer at the Midland Location
in Borrower's demand account or accounts with Lender, there shall be an advance
made under the Midland Revolving Credit Facility #3 in an amount equal to the
amount of such draft, provided that the aggregate of such advances which have
been made but not yet repaid shall not exceed $75,000.00, and Borrower shall
then have immediate provisional credit for such draft in the account into which
such draft is deposited to the extent of such advance. Each time Borrower
deposits a draft arising out of the sale of a boat, motor and/or trailer at the
Abilene Location in Borrower's demand account or accounts with Lender, there
shall be an advance made under the Abilene Revolving Credit Facility #3 in an
amount equal to the amount of such draft, provided that the aggregate of such
advances which have been made but not yet repaid shall not exceed $75,000.00,
and
7
<PAGE>
Borrower shall then have immediate provisional credit for such draft in the
account into which such draft is deposited to the extent of such advance. Each
time Borrower deposits a draft arising out of the sale of a boat, motor and/or
trailer at the Dallas Location in Borrower's demand account or accounts with
Lender, there shall be an advance made under the Dallas Revolving Credit
Facility #3 in an amount equal to the amount of such draft, provided that the
aggregate of such advances which have been made but not yet repaid shall not
exceed $75,000.00, and Borrower shall then have immediate provisional credit for
such draft in the account into which such draft is deposited to the extent of
such advance. Each time Borrower deposits a draft arising out of the sale of a
boat, motor and/or trailer at the Beaumont Location in Borrower's demand account
or accounts with Lender, there shall be an advance made under the Beaumont
Revolving Credit Facility #3 in an amount equal to the amount of such draft,
provided that the aggregate of such advances which have been made but not yet
repaid shall not exceed $75,000.00, and Borrower shall then have immediate
provisional credit for such draft in the account into which such draft is
deposited to the extent of such advance. Each time Borrower deposits a draft
arising out of the sale of a boat, motor and/or trailer at the Arlington
Location in Borrower's demand account or accounts with Lender, there shall be an
advance made under the Arlington Revolving Credit Facility #3 in an amount equal
to the amount of such draft, provided that the aggregate of such advances which
have been made but not yet repaid shall not exceed $75,000.00, and Borrower
shall then have immediate provisional credit for such draft in the account into
which such draft is deposited to the extent of such advance.
(c) Repayment of Revolving Credit Facility #3. At such time that the
-----------------------------------------
Lender receives final payment for a draft for which an advance was made under
the San Antonio Revolving Credit Facility #3, such payment shall be applied, or
shall be treated as having been applied, to the repayment of amounts outstanding
under the San Antonio Revolving Credit Facility #3 to the extent of the advance
made for such draft under the San Antonio Revolving Credit Facility #3. In the
event that a draft for which an advance was made under San Antonio Revolving
Credit Facility #3 is returned to Lender unpaid, the provisional credit for such
draft in the account into which such draft was deposited shall be revoked, and a
payment shall be deemed to have been made on San Antonio Revolving Credit
Facility #3 in the amount of the advance made for such draft under San Antonio
Revolving Credit Facility #3. At such time that the Lender receives final
payment for a draft for which an advance was made under the Austin Revolving
Credit Facility #3, such payment shall be applied, or shall be treated as having
been applied, to the repayment of amounts outstanding under the Austin Revolving
Credit Facility #3 to the extent of the advance made for such draft under the
Austin Revolving Credit Facility #3. In the event that a draft for which an
advance was made under Austin Revolving Credit Facility #3 is returned to Lender
unpaid, the provisional credit for such draft in the account into which such
draft was deposited shall be revoked, and a payment shall be deemed to have been
made on Austin Revolving Credit Facility #3 in the amount of the advance made
for such draft under Austin Revolving Credit Facility #3. At such time that the
Lender receives final payment for a draft for which an advance was made under
the Houston Revolving Credit Facility #3, such payment shall be applied, or
shall be treated as having been applied, to the repayment of amounts outstanding
under the Houston Revolving Credit Facility #3 to the extent of the advance made
for such draft under the Houston Revolving Credit Facility #3. In the event that
a draft for which an advance was made under Houston Revolving Credit Facility #3
is returned to Lender unpaid, the provisional
8
<PAGE>
credit for such draft in the account into which such draft was deposited shall
be revoked, and a payment shall be deemed to have been made on Houston Revolving
Credit Facility #3 in the amount of the advance made for such draft under
Houston Revolving Credit Facility #3. At such time that the Lender receives
final payment for a draft for which an advance was made under the Midland
Revolving Credit Facility #3, such payment shall be applied, or shall be treated
as having been applied, to the repayment of amounts outstanding under the
Midland Revolving Credit Facility #3 to the extent of the advance made for such
draft under the Midland Revolving Credit Facility #3. In the event that a draft
for which an advance was made under Midland Revolving Credit Facility #3 is
returned to Lender unpaid, the provisional credit for such draft in the account
into which such draft was deposited shall be revoked, and a payment shall be
deemed to have been made on Midland Revolving Credit Facility #3 in the amount
of the advance made for such draft under Midland Revolving Credit Facility #3.
At such time that the Lender receives final payment for a draft for which an
advance was made under the Abilene Revolving Credit Facility #3, such payment
shall be applied, or shall be treated as having been applied, to the repayment
of amounts outstanding under the Abilene Revolving Credit Facility #3 to the
extent of the advance made for such draft under the Abilene Revolving Credit
Facility #3. In the event that a draft for which an advance was made under
Abilene Revolving Credit Facility #3 is returned to Lender unpaid, the
provisional credit for such draft in the account into which such draft was
deposited shall be revoked, and a payment shall be deemed to have been made on
Abilene Revolving Credit Facility #3 in the amount of the advance made for such
draft under Abilene Revolving Credit Facility #3. At such time that the Lender
receives final payment for a draft for which an advance was made under the
Dallas Revolving Credit Facility #3, such payment shall be applied, or shall be
treated as having been applied, to the repayment of amounts outstanding under
the Dallas Revolving Credit Facility #3 to the extent of the advance made for
such draft under the Dallas Revolving Credit Facility #3. In the event that a
draft for which an advance was made under Dallas Revolving Credit Facility #3 is
returned to Lender unpaid, the provisional credit for such draft in the account
into which such draft was deposited shall be revoked, and a payment shall be
deemed to have been made on Dallas Revolving Credit Facility #3 in the amount of
the advance made for such draft under Dallas Revolving Credit Facility #3. At
such time that the Lender receives final payment for a draft for which an
advance was made under the Beaumont Revolving Credit Facility #3, such payment
shall be applied, or shall be treated as having been applied, to the repayment
of amounts outstanding under the Beaumont Revolving Credit Facility #3 to the
extent of the advance made for such draft under the Beaumont Revolving Credit
Facility #3. In the event that a draft for which an advance was made under
Beaumont Revolving Credit Facility #3 is returned to Lender unpaid, the
provisional credit for such draft in the account into which such draft was
deposited shall be revoked, and a payment shall be deemed to have been made on
Beaumont Revolving Credit Facility #3 in the amount of the advance made for such
draft under Beaumont Revolving Credit Facility #3. At such time that the Lender
receives final payment for a draft for which an advance was
9
<PAGE>
made under the Arlington Revolving Credit Facility #3, such payment shall be
applied, or shall be treated as having been applied, to the repayment of amounts
outstanding under the Arlington Revolving Credit Facility #3 to the extent of
the advance made for such draft under the Arlington Revolving Credit Facility
#3. In the event that a draft for which an advance was made under Arlington
Revolving Credit Facility #3 is returned to Lender unpaid, the provisional
credit for such draft in the account into which such draft was deposited shall
be revoked, and a payment shall be deemed to have been made on Arlington
Revolving Credit Facility #3 in the amount of the advance made for such draft
under Arlington Revolving Credit Facility #3.
(d) Fees. Borrower shall pay to Lender a fee for each advance made under
----
Revolving Credit Facility #3 in an amount established and announced by Lender
from time to time. Such fees shall be set forth in the monthly account analysis
provided to Borrower by Lender.
(e) Borrower's Promise to Pay. Borrower promises to pay to the order of
-------------------------
Lender when due all principal and all fees under Revolving Credit Facility #3.
(f) Lender's Right to Cancel Revolving Credit Facility #3. Lender may
-----------------------------------------------------
cancel Revolving Credit Facility #3 at any time in Lender's sole discretion, in
which event all unpaid principal, together with all unpaid fees under Revolving
Credit Facility #3 shall become immediately due and payable.
2.3.1 Future Adjustments of Caps for Revolving Credit Facility #3. Lender
-----------------------------------------------------------
and Borrower may, from time to time, by mutual agreement adjust the amounts of
the San Antonio Revolving Credit Facility #3 Cap, the Austin Revolving Credit
Facility #3 Cap, the Houston Revolving Credit Facility #3 Cap, the Midland
Revolving Credit Facility #3 Cap, the Abilene Revolving Credit Facility #3 Cap,
the Dallas Revolving Credit Facility #3 Cap, the Beaumont Revolving Credit
Facility #3 Cap, and the Arlington Revolving Credit Facility #3 Cap, provided
that the sum thereof shall not exceed $700,000.00. Any adjustment of such
amounts shall be effective upon the mailing by Lender by U.S. Mail of written
confirmation of any such adjustment to Borrower.
2.4 Credit Facility #4.
------------------
(a) Credit Facility #4 Loan. Subject to the terms and conditions hereof,
-----------------------
Lender agrees to extend to Travis Boats & Motors, Inc. and its Subsidiaries a
credit facility hereunder (hereinafter referred to as "Credit Facility #4") and
to make Loans to Travis Boats & Motors, Inc. and its Subsidiaries from time to
time from the date hereof until July 31, 1996, in the aggregate original
principal amount of $250,000.00. Each Loan under Credit Facility #4 shall be
evidenced by a promissory note in the amount of such Loan accruing interest at a
varying rate of interest equal to the Prime Rate, as it varies from time to
time, plus one-fourth percent (1/4%), or (at Borrower's option) at a fixed rate
of interest determined by
10
<PAGE>
Lender. Each such promissory note shall be in form and substance acceptable to
Lender and shall provide for equal monthly payments of principal and interest
being due and payable thereunder in an amount sufficient to fully amortize the
principal and interest under such promissory note over a forty-eight (48) month
period. The proceeds of the Loans under Credit Facility #4 shall be used solely
for the acquisition of new vehicles or equipment.
(b) Advance Amounts and Advance Requests for Credit Facility #4. Each
-----------------------------------------------------------
Advance under Credit Facility #4 shall be based on the cost to Borrower of the
vehicle or vehicles and/or equipment to which it relates, but not less than
$20,000.00 and not more than the remaining available credit under Credit
Facility #4. Each Advance under Credit Facility #4 will be pursuant to a written
advance request in form and substance satisfactory to Lender setting forth the
cost to Borrower of the vehicle or vehicles and/or equipment to which it relates
and accompanied by written documentation (e.g., invoices, etc.) verifying such
cost.
(c) Security for Credit Facility #4 Loans. Each Loan under Credit
-------------------------------------
Facility #4 must be secured by a first priority security interest in the vehicle
or equipment to which it relates. As a condition to making such Loan, the
borrowing entity to whom such Loan is being made must, at the time of the making
of each such Loan, execute a security agreement and financing statement in form
and substance satisfactory to Lender to create and perfect such security
interest.
2.5 Notes. Revolving Note #1 and Revolving Note #2 are collectively
-----
referred to herein as the "Revolving Notes". The Revolving Notes shall provide
that they shall bear interest at the "Prime Rate" (as defined in the Revolving
Notes), plus one-fourth percent (1/4%) per annum. Borrower expressly
acknowledges and agrees that Lender shall have no obligation to renew or extend
the Revolving Notes or Revolving Credit Facility #1 or Revolving Credit Facility
#2 at maturity as set forth in the Revolving Notes, and that in the event
Lender, in its sole and absolute discretion, determines not to offer to renew or
extend the Revolving Notes or Revolving Credit Facility #1 or Revolving Credit
Facility #2, Borrower shall be obligated to pay the same in full at maturity.
The promissory notes given in connection with Loans under Credit Facility #4 are
herein collectively referred to as the "Credit Facility #4 Notes" and separately
as a "Credit Facility #4 Note." Borrower expressly acknowledges and agrees that
Lender shall have no obligation to renew or extend any Credit Facility #4 Note.
2.6 Guarantors. E.D. Bohls, Robert C. Siddons, Joe E. Simpson, Mark T.
----------
Walton, Jesse Cox, and Ron Spradling shall each execute unconditional limited
guarantees of the Loans, providing for joint and several liability thereon, with
such limitations on the liability of such guarantors as may be set forth in such
guarantees.
11
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2.7 Cross Default. Borrower agrees that any default under any of the
-------------
Notes or under Revolving Credit Facility #3, or under any documents given as
security for any of the Notes or Revolving Credit Facility #3, shall be a
default under each of the Notes and under Revolving Credit Facility #3 and under
each and every other loan (the "Other Loans") from Lender to one or more of the
companies comprising Borrower or from Lender to any Subsidiary of any of such
companies, and that any default under any of the Other Loans shall be a default
under each of the Notes and under Revolving Credit Facility #3; provided,
however, that Lender's exercise of its remedies under any of the Other Loans
upon a default under any of the Notes or under Revolving Credit Facility #3, or
under any documents given as security for any of the Notes or Revolving Credit
Facility #3 shall be subject to any notice and opportunity to cure provisions
set forth in the documents and instruments evidencing and securing such Other
Loan. Borrower further agrees that any default under any loan from a third party
lender to one or more of the companies comprising Borrower or from a third party
lender to any of Borrower's Subsidiaries (the "Third Party Lender Loans"), or
under any documents given as security for any of the Third Party Lender Loans,
not cured within any applicable notice and cure periods shall be a default under
each of the Notes and under Revolving Credit Facility #3 and under each of the
Other Loans.
3. Conditions.
----------
3.1 All Loans Under Credit Facilities. The obligation of the Lender to
---------------------------------
make any Loan is subject to the accuracy of all representations and warranties
of the Borrower on the date of such Loan, to the performance by the Borrower of
its obligations under the Loan Documents and to the satisfaction of the
following further conditions: (a) prior to any Loan, there shall have occurred,
in the sole opinion of the Lender, no material adverse change in the assets,
liabilities, financial condition or business of any of the companies comprising
the Borrower, any of Borrower's Subsidiaries or any Guarantor; (b) no Default or
Event of Default shall have occurred and be continuing; (c) the making of the
Loan shall not be prohibited by, or subject the Lender to any penalty or onerous
condition under, any Legal Requirement; and (d) the Borrower shall have paid all
legal fees and expenses of the type described in Section 8.8 hereof through the
-----------
date of such Loan.
3.2 First Loans Under Credit Facilities. In addition to the matters
-----------------------------------
described in Section 3.1 hereof, the obligation of the Lender to make the first
-----------
Loan under any credit facility hereunder is subject to the receipt by the Lender
of each of the following, in Proper Form: (a) the Notes, executed by the
Borrower; (b) certificates from the Secretary of State or other appropriate
public official of the State of Texas as to the due qualification and continued
existence of the Borrower and Borrower's Subsidiaries; (c) certificates from the
Comptroller of Public Accounts of the State of Texas as to the good standing of
the Borrower and Borrower's Subsidiaries; (d) the Security Documents; (e)
policies or certificates of insurance addressed to the Lender reflecting the
insurance required by Section 5.6 hereof; and
-----------
12
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(f) evidence satisfactory to the Lender as to the priority of the security
interests created by the Security Documents, and to the further condition that,
at the time of the initial Loan, all legal matters incident to the transactions
herein contemplated shall be satisfactory to legal counsel for the Lender.
3.3 Floor Plan Fee. So long as Indebtedness is owing by Borrower to
--------------
Lender under this Loan Agreement, Borrower shall pay to Lender on a quarterly
basis a reasonable fee not to exceed $9,000 per year for reviewing the
Collateral securing the loans hereunder (the "Floor Plan Review Fee"). Such fee
shall be due and payable upon receipt by Borrower of notice from Lender setting
forth the amount of such fee each quarter. Notwithstanding the provisions for
payment by Borrower of a quarterly fee hereunder, nothing herein shall
constitute a commitment by Lender to extend the due date of the indebtedness
beyond the term set forth herein and in the Notes.
4. Representations and Warranties.
------------------------------
To induce the Lender to enter into this Agreement and to make the Loans,
the Borrower represents and warrants as follows:
4.1 Organization. Each of the companies comprising the Borrower and
------------
each of Borrower's Subsidiaries is duly organized, validly existing and in good
standing under the laws of the state of its organization; has all power and
authority to conduct its business as presently conducted; and is duly qualified
to do business and in good standing in the State of Texas.
4.2 Financial Statements. Except as heretofore disclosed to Lender in
--------------------
writing, the financial statements delivered to the Lender fairly present the
financial condition and the results of operations of the Borrower and the
Guarantors as at the dates and for the periods indicated. No material adverse
change has occurred in the assets, liabilities, financial condition, business or
affairs of the Borrower nor any of such other Persons since the dates of such
financial statements. The books and records of the Borrower accurately reflect
the financial condition of Borrower and Borrower's Subsidiaries. Neither the
Borrower, any of Borrower's Subsidiaries, nor any Guarantor is subject to any
instrument or agreement materially and adversely affecting its financial
condition, business or affairs.
4.3 Enforceable Obligations; Authorization. The Loan Documents are
--------------------------------------
legal, valid and binding obligations of the Parties, enforceable in accordance
with their respective terms, except as may be limited by bankruptcy, insolvency
and other similar laws affecting creditors' rights generally and by general
equitable principles. The execution, delivery and performance of the Loan
Documents have all been duly authorized by all necessary action; are within the
power and authority of the parties; do not and will not contravene or violate
any Legal Requirements or
13
<PAGE>
the Organizational Documents of the parties; do not and will not result in the
breach of, or constitute a default under, any agreement or instrument by which
the Parties or any of their respective Property may be bound or affected; and do
not and will not result in the creation of any Lien upon any Property of any of
the Parties except as expressly contemplated therein. All necessary permits,
registrations and consents for such making and performance have been obtained.
Except as otherwise expressly stated in the Security Documents, the Liens of the
Security Documents constitute valid and perfected first and prior Liens on the
Property described therein, subject to no other Liens whatsoever.
4.4 Other Debt. Neither the Borrower nor any of Borrower's Subsidiaries
----------
is in default in the payment of any other Indebtedness or under any agreement,
mortgage, deed of trust, security agreement or lease to which it is a party.
4.5 Litigation. Except as heretofore disclosed to the Lender in writing,
----------
there is no litigation or administrative proceeding pending or, to the knowledge
of the Borrower, threatened against, nor any outstanding judgment, order or
decree affecting, the Borrower, any of Borrower's Subsidiaries or any Guarantor
before or by any Governmental Authority which has resulted in or may result in
liability pursuant thereto in excess of $250,000.00 in the aggregate on a
consolidated basis. Neither the Borrower nor any of Borrower's Subsidiaries is
in default with respect to any judgment, order or decree of any Governmental
Authority.
4.6 Title. Except as previously disclosed to Lender in writing prior to
-----
the execution hereof, the Borrower has good and marketable title to its
Property, free and clear of all Liens (except for its Property that is covered
by an Intercreditor Agreement which have been sold to Borrower on a purchase
money security interest basis, and except with respect to Liens permitted under
Section 6.2 hereof).
- -----------
4.7 Taxes. The Borrower, Borrower's Subsidiaries and the Guarantors
-----
each have filed all tax returns required to have been filed and paid all taxes
shown thereon to be due, except those for which extensions have been obtained
and those which are being contested in good faith.
4.8 Regulation U. None of the proceeds of any Loan will be used for the
------------
purpose of purchasing or carrying directly or indirectly any margin stock or for
any other purpose would constitute this transaction a "purpose credit" within
the meaning of Regulation U of the Board of Governors of the Federal Reserve
System.
4.9 Subsidiaries. As of the date hereof, the Borrower has no Subsidiaries
------------
except that Travis Snowden Marine, Inc., Falcon Marine, Inc., Falcon Marine
Abilene, Inc., Travis Boats & Motors Baton Rouge, Inc., Travis Boating Center
Beaumont, Inc., Travis Boating Center Arlington, Inc., Travis Boating Center
Little Rock, Inc., TBC Management, Inc. and TBC Arkansas, Inc. are wholly owned
subsidiaries of Travis Boats & Motors, Inc.
14
<PAGE>
4.10 Representations by Others. All statements made by or on behalf of the
-------------------------
Borrower, any of Borrower's Subsidiaries or any Guarantor in connection with any
Loan Document shall constitute representations and warranties of the Borrower
hereunder.
4.11 Compliance with Applicable Law and the Provisions of this Agreement.
-------------------------------------------------------------------
Borrower and each of Borrower's Subsidiaries is in compliance with all laws
(including statutes, rules, ordinances and regulations) of all governmental
authorities having jurisdiction over Borrower, and Borrower is in compliance
with all of the provisions of this Agreement.
5. Affirmative Covenants.
---------------------
The Borrower covenants and agrees with the Lender that prior to the
termination of this Agreement it will do, and if necessary cause to be done,
each and all of the following:
5.1 Taxes, Existence, Regulations, Property, etc. At all times (a) pay
--------------------------------------------
when due, and cause each of Borrower's Subsidiaries to pay when due, all taxes
and governmental charges of every kind upon Borrower or any of Borrower's
Subsidiaries or against Borrower's or any of Borrower's Subsidiaries' income,
profits or Property; (b) do all things necessary, and cause each of Borrower's
Subsidiaries to do all things necessary, to preserve Borrower's and all of
Borrower's Subsidiaries' corporate existence, qualifications, rights and
franchises in all States where such qualification is necessary or desirable; (c)
comply, and cause each of Borrower's Subsidiaries to comply, with all applicable
Legal Requirements in respect of the conduct of Borrower's and all of Borrower's
Subsidiaries' business and the ownership of Borrower's and all of Borrower's
Subsidiaries' Property; and (d) cause, and cause each of Borrower's Subsidiaries
to cause, Borrower's and all of Borrower's Subsidiaries' Property to be
protected, maintained and kept in good repair and make, and cause each of
Borrower's Subsidiaries to make, all replacements and additions to Borrower's
and all of Borrower's Subsidiaries' Property as may be reasonably necessary to
conduct Borrower's and all of Borrower's Subsidiaries' business properly and
efficiently. Notwithstanding the foregoing, Borrower may, to the extent and in
the manner permitted by applicable law, contest the payment of any claim for any
such taxes or governmental charges, if (a) such contest is made in good faith on
a timely basis; (b) Borrower has notified Lender of Borrower's intent to contest
such payment at least seven (7) days prior to commencing the contest; (c)
Borrower has made any deposit or payment under protest, or posted security as
and to the extent required by applicable law; (d) Borrower or one of Borrower's
Subsidiaries has established adequate reserves therefor in accordance with
Generally Accepted Accounting Principles on the books of Borrower or one of
Borrower's Subsidiaries; (e) Borrower diligently and in good faith contests the
same by appropriate legal proceedings which shall operate to prevent the
enforcement or collection of the same and the sale of any part of Borrower's or
any of Borrower's
15
<PAGE>
Subsidiaries' Property to satisfy the same; (f) Borrower promptly upon final
determination thereof pays or causes to be paid the amount of any such claim so
determined, together with all costs, interest and penalties payable in
connection therewith; (g) the failure to pay the claim does not constitute a
default under any other deed of trust, mortgage or security interest covering or
affecting any part of such Property, and does not subject Lender to any civil or
criminal liability or to any damages or expense; and (h) the aggregate amount of
all claims being contested shall not exceed $100,000.00; provided, however, that
Borrower shall immediately upon request of Lender pay or cause to be paid (and
if Borrower shall fail so to do, Lender may, but shall not be required to, pay
or cause to be discharged or bonded against) any such claim notwithstanding such
contest if, in the reasonable opinion of Lender, any such Property is in
jeopardy or in danger of being forfeited or foreclosed.
5.2 Financial Statements and Information. Furnish to the Lender copies
------------------------------------
of each of the following: (a) as soon as available and in any event within one
hundred and fifty (150) days after the end of each fiscal year of the Borrower,
Annual Consolidated Financial Statements of the Borrower with a reviewed or
audited opinion by an independent CPA firm acceptable to the Lender, (b) as soon
as available and in any event within one hundred and fifty (150) days after the
end of each calendar year, the Personal Financial Statement of each Guarantor;
(c) within forty-five (45) days after the end of each calendar quarter
(including the final quarter in Borrower's fiscal year) Consolidated Financial
Statements of the Borrower and Unconsolidated Financial Statements of Borrower's
operations at the San Antonio Location, at the Austin Location, at the Houston
Location, at the Midland Location, at the Abilene Location, at the Dallas
Location, at the Beaumont Location, and at the Arlington Location, and of Travis
Boats & Motors, Inc., Travis Snowden Marine, Inc., Falcon Marine, Inc., Falcon
Marine Abilene, Inc., Travis Boating Center Beaumont, Inc., and Travis Boating
Center Arlington, Inc., and any other Subsidiary of Travis Boats & Motors, Inc.,
as of the end of the immediately preceding calendar quarter, prepared in
reasonable detail and containing such information as Lender may request, and (d)
such other information relating to the financial condition and affairs of the
Borrower, each of Borrower's Subsidiaries and each Guarantor as from time to
time may be requested by the Lender.
5.3 Inspection. Permit, and cause each of Borrower's Subsidiaries to
----------
permit, the Lender to inspect Borrower's and each of Borrower's Subsidiaries'
Property, to examine Borrower's and each of Borrower's Subsidiaries' files,
books and records and make and take away copies thereof, and to discuss its
affairs with Borrower's and each of Borrower's Subsidiaries' officers and
accountants, all at such times and intervals and to such extent as the Lender
may reasonably desire. Borrower will provide, and cause each of Borrower's
Subsidiaries to provide, access to Borrower's and each of Borrower's
Subsidiaries' Property, files, books and records at reasonable hours, and will
assist, and cause each of Borrower's Subsidiaries to
16
<PAGE>
assist, Lender or Lender's representatives in locating any of Borrower's and
each of Borrower's Subsidiaries' Property.
5.4 Further Assurances. Promptly execute and deliver, and cause each of
------------------
Borrower's Subsidiaries to execute and deliver, any and all other and further
instruments which may be reasonably requested by the Lender to cure any defect
in the execution and delivery of any Loan Document or more fully to describe
particular aspects of the Borrower's agreements set forth in the Loan Documents
or so intended to be.
5.5 Books and Records. Maintain, and cause each of Borrower's
-----------------
Subsidiaries to maintain, books of record and account in accordance with
Generally Accepted Accounting Principles consistently applied throughout the
terms of the credit facilities governed hereby.
5.6 Insurance. Maintain insurance with such insurers, on such of
---------
Borrower's and Borrower's Subsidiaries' properties, in such amounts and against
such risks as is satisfactory to the Lender (including, without limitation,
casualty and business interruption insurance), and furnish, and cause each of
Borrower's Subsidiaries to furnish, the Lender satisfactory evidence thereof.
These insurance provisions are cumulative of the insurance provisions of the
Security Documents. The Borrower shall cause, and, with respect to insurance on
property of any of Borrower's Subsidiaries serving as collateral for any
Indebtedness to Lender, cause each of Borrower's Subsidiaries to cause, the
Lender to be named as a beneficiary of such insurance, and shall provide, and
cause each of Borrower's Subsidiaries to provide, the Lender with copies of the
policies of insurance and a certificate of the insurer that the insurance
required by this Section may not be canceled, reduced or affected in any matter
without thirty (30) days' prior written notice to Lender.
5.7 Notice of Certain Matters. Notify, and cause each of Borrower's
-------------------------
Subsidiaries to notify, the Lender immediately upon acquiring knowledge of the
occurrence of any of the following: the institution or threatened institution of
any lawsuit or administrative proceeding affecting the Borrower or any of
Borrower's Subsidiaries or any Guarantor which would have a material adverse
effect on Borrower or any of Borrower's Subsidiaries or any Guarantor; the
existence of any actual or potential contingent liabilities which would have a
material adverse effect on Borrower or any of Borrower's Subsidiaries or any
Guarantor; the occurrence of any material adverse change in the assets,
liabilities, financial condition, business or affairs of the Borrower or any of
Borrower's Subsidiaries or any Guarantor; or the occurrence of any Event of
Default or any Default. The Borrower will notify, and cause each of Borrower's
Subsidiaries to notify, the Lender in writing at least thirty (30) Business Days
prior to the date that the Borrower or any of Borrower's Subsidiaries changes
its name or the location of its chief executive office or principal place of
business or the place where it keeps its books and records.
17
<PAGE>
5.8 Security. Borrower acknowledges and agrees that the Notes and the
--------
Loans evidenced thereby and Borrower's payment obligations under Revolving
Credit Facility #3 and any and all other indebtedness owed by Borrower or by any
of Borrower's Subsidiaries to Lender, whether now existing or arising in the
future, shall be secured by a first and prior security interest in the items of
security and collateral described in the Security Documents, including, without
limitation, all inventory (now owned or hereafter acquired) of Borrower.
Borrower acknowledges and agrees that the Notes and Borrower's payment
obligations under Revolving Credit Facility #3 and any and all other
indebtedness owed by Borrower, or by any one or more of the companies comprising
Borrower, or by any of the Borrower's Subsidiaries, to Lender, whether now
existing or arising in the future shall be deemed cross-collateralized (meaning
any collateral serving as security for one indebtedness owed by Borrower, or by
any one of the companies comprising Borrower, or by any of Borrower's
Subsidiaries, to Lender shall serve as security for all other indebtedness owed
by Borrower, or by any one of the companies comprising Borrower, or by any of
Borrower's Subsidiaries, to Lender) and cross-defaulted (meaning a default under
one indebtedness owed by Borrower, or by any one of the companies comprising
Borrower, or by any of Borrower's Subsidiaries, to Lender shall constitute a
default under all other indebtedness owed by Borrower, or by any one of the
companies comprising Borrower, or by any of Borrower's Subsidiaries, to Lender).
5.9 Financial Covenants.
-------------------
(a) Minimum Tangible Net Worth. Borrower shall at all times maintain a
--------------------------
Tangible Consolidated Net Worth of not less than $2,500,000 as evidenced by
financial statements submitted to Lender pursuant to Section 5.2 hereof.
-----------
(b) Current Maturities Coverage Ratio. The ratio of the Borrower's net
---------------------------------
income after taxes for the Prior Period (as defined below) plus amortization
expense and depreciation expense for the Prior Period, divided by the sum of the
Borrower's current maturities of long term debt (excluding the current
maturities of any unamortized portion of any long term indebtedness to the
Lender that becomes due and payable to the Lender at the maturity of such debt)
for the Prior Period plus current maturities of capital leases for the Prior
Period plus any dividends or distributions to shareholders made during the Prior
Period (the "Current Maturities Coverage Ratio"), shall at all times be greater
than 1.5 to 1.00. For the purpose of this provision, the term "Prior Period"
shall mean the previous four (4) calendar quarters. The Current Maturities
Coverage Ratio shall be tested on a calendar quarterly basis.
5.10 Certificate of Compliance. Furnish to Lender within forty-five (45)
-------------------------
days after the end of each calendar quarter a Certificate of Compliance in the
form attached hereto as Exhibit "A" executed by the President or the Chief
Financial Officer of Borrower stating that to the best of such person's
knowledge and belief
18
<PAGE>
after reasonably diligent inquiry Borrower is in compliance with all of the
covenants contained in this Agreement and setting forth the Borrower's
computations relating to compliance with all financial covenants set forth
herein, including, without limitation, Borrower's computations relating to
compliance with Section 5.9.
------------
5.11 Borrowing Base #2 Certificates. Furnish to Lender within forty-five
------------------------------
(45) days after the end of each calendar month a Borrowing Base #2 Certificate
in the form attached hereto as Exhibit "B" executed by the President or the
Chief Financial Officer of Borrower.
6. Negative Covenants.
------------------
The Borrower covenants and agrees with the Lender that prior to the
termination of this Agreement it will not do any of the following without the
prior written consent of the Lender:
6.1 Indebtedness. Create, incur, suffer or permit to exist, or assume or
------------
guarantee, directly or indirectly, or become or remain liable, or allow any of
Borrower's Subsidiaries to create, incur, suffer or permit to exist, or assume
or guaranty, directly or indirectly, or become or remain liable, with respect to
any Indebtedness whether direct, indirect, absolute, contingent or otherwise,
except the following: (a) Indebtedness to the Lender; (b) Indebtedness secured
by Liens permitted by Section 6.2 hereof; (c) other liabilities existing on the
-----------
date of this Agreement as evidenced by the most recent financial statements
delivered to the Lender and all renewals and extensions (but not increases)
thereof; (d)Indebtedness not exceeding $500,000 per annum in the aggregate on a
consolidated basis arising out of operating leases; (e) current accounts payable
and unsecured current liabilities to vendors, suppliers and persons providing
services, for expenditures for goods and services normally required by Borrower
and Borrower's Subsidiaries in the ordinary course of business and on ordinary
trade terms; (f) the guarantee by Borrower and/or Borrower's Subsidiaries of up
to $100,000.00 in the aggregate on a consolidated basis at any given time in
boat loans by any lender to professional fishermen made in connection with the
purchase by such fishermen of boats from Borrower and/or Borrower's
Subsidiaries, and the guarantee by Borrower and/or Borrower's Subsidiaries of
debt secured by a purchase money security interest subject to an Intercreditor
Agreement (including, but not limited to, debt to Transamerica Commercial
Finance Corporation and to Deutsche Financial Services Corporation), debt owed
to Hibernia National Bank shown on the most recent Financial Statements supplied
by Borrower to Lender or otherwise disclosed by Borrower to Lender in writing
prior to the date hereof, and seller financing debt arising out of the
acquisition by Borrower of Redland Marine, Inc. as approved by Lender in writing
("Permitted Guaranties"); and (g) Indebtedness to a Person other than Lender,
provided that the total sum of such Indebtedness minus (i) Indebtedness to a
Person other than Lender that is outstanding as of the date
19
<PAGE>
hereof and disclosed in Borrower's most recent financial statements of Borrower
delivered to Lender, and minus (ii) Indebtedness to a Person other than Lender
specifically consented to in writing by Lender, shall not exceed an aggregate
outstanding amount, on a consolidated basis, of $500,000.00 without the written
approval of Lender.
6.2 Liens. Create or suffer to exist, or allow any of Borrower's
-----
Subsidiaries to create or suffer to exist, except in the ordinary course of
business, any Lien upon any of its Property now owned or hereafter acquired, or
acquire any Property upon any conditional sale or other title retention device
or arrangement or any purchase money security agreement; or in any manner
directly or indirectly sell, assign, pledge or otherwise transfer any of its
accounts or contract rights or real estate assets; provided, however, that the
-----------------
Borrower may create or suffer to exist and may allow any of Borrower's
Subsidiaries to create or suffer to exist: (a) artisans' or mechanics' Liens
arising in the ordinary course of business, and Liens for taxes, but only to the
extent that payment thereof shall not at the time be due; (b) Liens in effect on
the date hereof and disclosed to the Lender in writing, provided that neither
the Indebtedness secured thereby nor the Property covered thereby shall
increase; and (c) Liens in favor of the Lender.
6.3 Contingent Liabilities. Directly or indirectly guarantee the
----------------------
performance or payment of, or purchase or agree to purchase, or assume or
contingently agree to become or be secondarily liable in respect of, or allow
any of Borrower's Subsidiaries to directly or indirectly guarantee the
performance or payment of, or purchase or agree to purchase, or assume or
contingently agree to become or be secondarily liable in respect of, any
obligation or liability of any other Person or Subsidiary except for (i) the
endorsement of checks or other negotiable instruments in the ordinary course of
business, and (ii) Permitted Guaranties.
6.4 Mergers, Consolidations, Dispositions, Acquisitions and Expansions.
------------------------------------------------------------------
In any single transaction or series of transactions, directly or indirectly: (a)
liquidate or dissolve, or allow any of Borrower's Subsidiaries to liquidate or
dissolve (provided that Borrower may liquidate and/or dissolve Travis Myler
Marine, Inc.); (b) be a party to, or allow any of Borrower's Subsidiaries to be
a party to, any merger or consolidation; (c) sell, convey or lease, or allow any
of Borrower's Subsidiaries to sell, convey or lease, all or any substantial part
of its assets, except for sale of Inventory in the ordinary course of business;
(d) acquire, or allow any of Borrower's Subsidiaries to acquire, all or
substantially all of the assets of any Person, or any shares of stock of or
similar interest in any other Person; or (e) expand to a different location, or
allow any of Borrower's Subsidiaries to expand to a different location.
6.5 Redemption, Dividends and Distributions. At any time without the
---------------------------------------
prior written consent of Lender:
20
<PAGE>
(a) Repurchase, redeem or retire, or allow any of Borrower's Subsidiaries
to repurchase, redeem or retire, directly or indirectly, any shares of its
capital stock, common stock or preferred stock; provided, however, that Borrower
shall be allowed to redeem $225,000.00 of the preferred stock of Travis Boats &
Motors, Inc., at the rate of $75,000.00 per year provided that all other
covenants and negative covenants contained in this Agreement are complied with;
or
(b) Pay any dividend or make any distribution of cash, or allow any of
Borrower's Subsidiaries to pay any dividend or make any distribution of cash, to
stockholders except payments or distributions by any of Borrower's Subsidiaries
to any of the companies comprising Borrower and payments and distributions which
comply with the following (all requirements must be complied with):
(1) The payments or distributions shall not exceed $25,000 per annum;
(2) The payments or distributions are to occur on or after January 1,
1995 and on same date or thereafter each calendar year;
(3) The Borrower must be in compliance with the financial covenant
set forth in Section 5.9(b).
Notwithstanding the provisions for payment by Borrower of an annual dividend
hereunder, nothing herein shall constitute a commitment by Lender to extend the
due date of the indebtedness beyond the maturity set forth in the Notes.
6.6 Nature of Business; Management; Ownership. Change, or allow any of
-----------------------------------------
Borrower's Subsidiaries to change, the nature of its business or enter into any
business which is substantially different from the business in which it is
presently engaged or permit, or allow any of Borrower's Subsidiaries to permit,
any material change in its management or permit, or allow any of Borrower's
Subsidiaries to permit, in any single transaction or series of transactions,
directly or indirectly, a sale, conveyance, pledge or hypothecation of any
portion of the ownership of Borrower or any of Borrower's Subsidiaries.
6.7 Transactions with Related Parties. Enter into, or allow any of
---------------------------------
Borrower's Subsidiaries to enter into, any transaction or agreement with any
officer, director or holder of any outstanding capital stock of the Borrower or
any of Borrower's Subsidiaries (or any Affiliate of any such Person) unless the
same is upon terms substantially similar to those obtainable from wholly
unrelated sources, subject, however, to Section 6.11 hereof.
------------
6.8 Loans and Investments. Except as heretofore disclosed by the Borrower
---------------------
to the Lender in writing and except for advances to employees in the ordinary
and usual course of Borrower's or Borrower's Subsidiaries' businesses, make, or
allow any of Borrower's Subsidiaries to make, any loan, advance,
21
<PAGE>
extension of credit or capital contribution to, or make any Investment in, any
Person or Subsidiary, or make any commitment to make any such extension of
credit or Investment, subject, however, to Section 6.11 hereof.
------------
6.9 Transfers of Inventory. Transfer, or allow any of Borrower's
----------------------
Subsidiaries to transfer, any inventory constituting part of the Collateral
securing the Notes from any of Borrower's sales locations to any other location,
including (without limitation) the sales location operated by an affiliate of
Borrower's in Baton Rouge, Louisiana, without prior written consent of Lender.
6.10 Maximum Capital Expenditures Per Year. Without the prior written
-------------------------------------
consent of Lender, make, or allow any of Borrower's Subsidiaries to make,
capital expenditures which in the aggregate on a consolidated basis exceed
$500,000.00 in any twelve (12) month period.
6.11 Loans and Equity Contributions to Non-Borrower Subsidiaries. Make any
-----------------------------------------------------------
long term loan (i.e., with a term greater than 60 days) or any equity
contribution to any Subsidiary of Borrower that is not one of the entities
comprising Borrower (the "Non-Borrowing Subsidiaries); provided that Borrower
may make short term loans (i.e., with terms of 60 days or less) to Non-Borrowing
Subsidiaries.
7. Events of Default and Remedies.
------------------------------
7.1 Events of Default. If any of the following events shall occur (which
-----------------
events shall be events of default hereunder):
(a) Borrower fails to pay when due any principal owing by Borrower to
Lender, whether pursuant to this Agreement or otherwise, including (without
limitation) any amounts owing by Borrower to Lender under the Notes or under
Revolving Credit Facility #3; or
(b) Any representation or warranty made in connection with any Loan
Document shall prove to have been incorrect, false or misleading when made; or
(c) The Borrower or any of Borrower's Subsidiaries shall make a general
assignment for the benefit of creditors or shall petition or apply to any
tribunal for the appointment of a trustee, custodian, receiver or liquidator of
all or any substantial part of its business, estate or assets or shall commence
any proceeding under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation law of any jurisdiction,
whether now or hereafter in effect; or
(d) Any such petition or application shall be filed or any such proceeding
shall be commenced against the Borrower or any of Borrower's Subsidiaries and
the Borrower or any of Borrower's Subsidiaries by any act or omission shall
indicate approval thereof, consent thereto or acquiescence therein, or any order
shall be
22
<PAGE>
entered appointing a trustee, custodian, receiver or liquidator of all or any
substantial part of the assets of the Borrower or any of Borrower's Subsidiaries
or granting relief to the Borrower or any of Borrower's Subsidiaries or
approving the petition in any such proceeding, and such order shall remain in
effect for more than thirty (30) days; or
(e) The Borrower or any of Borrower's Subsidiaries shall fail generally to
pay its debts as they become due or suffer any writ of attachment or execution
or any similar process to be issued or levied against it or any substantial part
of its Property which is not released, stayed, bonded or vacated within thirty
(30) days after its issue or levy; or
(f) The Borrower or any of Borrower's Subsidiaries shall have concealed,
removed, or permitted to be concealed or removed, any part of its Property, with
intent to hinder, delay or defraud its creditors or any of them, or made or
suffered a transfer of any of its Property which may be fraudulent under any
bankruptcy, fraudulent conveyance or similar law, or shall have made any
transfer of its Property to or for the benefit of a creditor at a time when
other creditors similarly situated have not been paid; or
if the following event of default shall occur, and Borrower shall fail to cure
such default within five (5) business days after its occurrence:
(a) Borrower fails to pay when due any interest owing by Borrower to
Lender pursuant to this Agreement and/or under the Notes or otherwise;
or
if any of the following events of default shall occur, and Borrower shall fail
to cure such default within thirty (30) business days after written notice
thereof is sent by Lender to Borrower:
(a) The Borrower or any of Borrower's Subsidiaries (i) shall fail to pay
at maturity, or within any applicable period of grace, any principal
or interest on any other borrowed money obligation owed by Borrower or
any of Borrower's Subsidiaries to any other lender, or shall fail to
observe or perform any term, covenant or agreement contained in any
agreement or obligation by which it is bound, or (ii) is in default
under or in violation of any Legal Requirement; or
(b) Default shall occur in the punctual and complete performance of any
covenant of the Borrower or any other Person contained in this Loan
Agreement or any other Loan Document; or
23
<PAGE>
(c) Final judgment or judgments in the aggregate for the payment of money
in excess of $10,000.00 shall be rendered against the Borrower or any
of Borrower's Subsidiaries and the same shall remain undischarged for
a period of thirty (30) days during which execution shall not be
effectively stayed; or
(d) The Borrower or any of Borrower's Subsidiaries or any other Person
shall claim, or any court shall find or rule, that the Lender does not
have a valid Lien as provided for herein on any security which may
have been provided by the Borrower or any of Borrower's Subsidiaries,
or such other Person; or
(e) The sale, encumbrance or abandonment (except as otherwise expressly
permitted by this Agreement) of any of the Property now or hereinafter
subject to any of the Security Documents; or the making of any levy,
seizure or attachment thereof or thereon; or the loss, theft,
substantial damage, or destruction of any such Property; or
(f) Any order shall be entered in any proceeding against the Borrower or
any of Borrower's Subsidiaries decreeing the dissolution, liquidation
or split-up thereof, and such order shall remain in effect for thirty
(30) days; or
(g) The occurrence of an Event of Default under any Loan Document; or
(h) A material adverse change shall occur in the assets, liabilities,
financial condition, business or affairs of the Borrower or any of
Borrower's Subsidiaries; or
(i) The Lender shall reasonably and in good faith deem repayment of the
Notes or any other indebtedness of the Borrower or any of Borrower's
Subsidiaries to the Lender to be insecure;
then the Lender may without further notice to Borrower or any other Person, do
any or all of the following: (1) without notice to the Borrower or any other
Person, declare the Notes and the indebtedness under Revolving Credit Facility
#3 and any and all other indebtedness of Borrower or any of Borrower's
Subsidiaries to Lender to be, and thereupon the Notes and the indebtedness under
Revolving Credit Facility #3 and any and all other indebtedness of Borrower or
any of Borrower's Subsidiaries to Lender shall forthwith become, immediately due
and payable, together with all accrued interest thereon, without notice of any
kind (including, without limitation, notice of acceleration or of intention to
accelerate), and without
24
<PAGE>
presentment and demand or protest, all of which are hereby expressly waived; (2)
without notice to the Borrower or any other Person, terminate all Commitments;
(3) exercise its rights of offset against each account and all other Property of
the Borrower or any of Borrower's Subsidiaries in the possession of the Lender,
which right is hereby granted by the Borrower to the Lender; and (4) exercise
any and all other rights pursuant to the Loan Documents:
7.2 Remedies Cumulative. No remedy, right or power conferred upon the
-------------------
Lender is intended to be exclusive of any other remedy, right or power given
hereunder or now or hereafter existing at law, in equity, or otherwise, and all
such remedies, rights and powers shall be cumulative.
8. Miscellaneous.
-------------
8.1 No Waiver. No waiver of any Default shall be deemed to be a waiver of
---------
any other Default. No failure to exercise or delay in exercising any right or
power under any Loan Document shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power preclude any further or
other exercise thereof or the exercise of any other right or power. No
amendment, modification or waiver of any Loan Document shall be effective unless
the same is in writing and signed by the Person against whom such amendment is
sought to be enforced. No notice to or demand on the Borrower or any other
Person shall entitle the Borrower or any other Person to any other or further
notice or demand in similar or other circumstances.
8.2 Notices. All notices under the Loan Documents shall be in writing and
-------
either (i) delivered against receipt therefor, (ii) mailed by first class mail,
or by registered or certified mail, return receipt requested, or (iii) sent by
telex, telegram or telecopy, in each case addressed as follows:
(a) If to the Borrower, to:
Travis Boats & Motors, Inc.
13045 Research Blvd.
Austin, Texas 78750
Attention: Mark T. Walton, President
(b) If to the Lender, to:
NationsBank of Texas, N.A.
P.O. Box 300
San Antonio, Texas 78291
Attention: Mr. Steve Warrick
25
<PAGE>
or to such other address as a party may designate. Notices shall be deemed to
have been given (whether actually received or not) when delivered (or, if
mailed, on the next Business Day).
8.3 Governing Law. Unless otherwise specified therein, each Loan
-------------
Document shall be governed by and construed in accordance with the laws of the
State of Texas and the United States of America. Borrower hereby irrevocably
agrees that any legal proceeding against the Lender arising out of or in
connection with this Agreement or the other Loan Documents shall be brought in
the district courts of Bexar County, Texas, or in the United States District
Court for the Western District of Texas, San Antonio Division.
8.4 Survival; Parties Bound. All representations, warranties, covenants
-----------------------
and agreements made by or on behalf of the Borrower in connection herewith shall
survive the execution and delivery of the Loan Documents, shall not be affected
by any investigation made by any Person, and shall bind the Borrower and its
successors, trustees, receivers and assigns and inure to the benefit of the
successors and assigns of the Lender, provided that the undertaking of the
Lender hereunder to make Loans to the Borrower shall not inure to the benefit of
any successor or assign of the Borrower. The term of this Agreement shall be
until the final maturity of the Notes and the payment of all amounts due under
the Loan Documents.
8.5 Counterparts. This Agreement may be executed in several identical
------------
counterparts, and by the parties hereto on separate counterparts, and each
counterpart, when so executed and delivered, shall constitute an original
instrument, and all such separate counterparts shall constitute but one and the
same instrument.
8.6 Usury Not Intended; Refund of Any Excess Payments. It is the intent
-------------------------------------------------
of the parties in the execution and performance of this Agreement to contract in
strict compliance with the usury laws of the State of Texas and the United
States of America from time to time in effect. In furtherance thereof, the
Lender and the Borrower stipulate and agree that none of the terms and
provisions contained in this Agreement or the other Loan Documents shall ever be
construed to create a contract to pay for the use, forbearance or detention of
money with interest at a rate in excess of the Highest Lawful Rate and that for
purposes hereof "interest" shall include the aggregate of all charges which
constitute interest under such laws that are contracted for, reserved, taken,
charged or received under this Agreement. In determining whether or not the
interest paid or payable, under any specific
26
<PAGE>
contingency, exceeds the Highest Lawful Rate, the Borrower and the Lender shall,
to the maximum extent permitted under applicable law, (a) treat all Loans as but
a single extension of credit (and Borrower and the Lender agree that such is the
case and that provision herein for multiple Loans and Notes is for convenience
only), (b) characterize any non-principal payment as an expense, fee or premium
rather than as interest, (c) exclude voluntary prepayments and the effects
thereof, and (d) "spread" the total amount of interest throughout the entire
contemplated term of the Loans. The provisions of this paragraph shall control
over all other provisions of the Loan Documents which may be in apparent
conflict herewith. The Lender and the Borrower agree that Chapter 15 of the
Texas Credit Code shall not apply to this Agreement or the Notes.
8.7 Captions. The headings and captions appearing in the Loan
--------
Documents have been included solely for convenience and shall not be considered
in construing the Loan Documents.
8.8 Expenses. Any provision to the contrary notwithstanding, and
--------
whether or not the transactions contemplated by this Agreement shall be
consummated, the Borrower shall pay on demand all reasonable out-of-pocket
expenses (including, without limitation, the fees and expenses of counsel for
the Lender) in connection with the negotiation, preparation, execution, filing,
recording, refiling, re-recording, modification, supplementing and waiver of the
Loan Documents and the making, servicing and collection of the Loans. Without
limitation of the foregoing, Borrower shall pay all costs and expenses and
reimburse Lender for any and all expenditures of every character incurred or
expended from time to time, regardless of whether or not a default shall have
occurred, in connection with Lender's evaluating, monitoring, administering and
protecting the Collateral, and all costs and expenses relating to Lender's
exercising any of its rights and remedies hereunder or at law, including,
without limitation, all appraisal (initial or reappraisal) fees, consulting fees
and commissions, fees incident to security interest, lien and other title
searches, and reports, escrow fees, attorney's fees, legal expenses, court
costs, auctioneer fees and expenses, other fees and expenses incurred in
connection with liquidation or sale of Collateral and all other professional
fees. Any amount to be paid hereunder by Borrower to Lender shall be a demand
obligation owing by Borrower to Lender and, to the extent not prohibited by
applicable law, shall bear interest from the date of expenditure until paid at
the Highest Lawful Rate of interest. The obligations of the Borrower under this
and the following section shall survive the termination of this Agreement and/or
the payment of the Notes.
27
<PAGE>
8.9 Indemnification. The Borrower agrees to indemnify, defend and hold
---------------
the Lender harmless from and against any and all loss, liability, obligation,
damage, penalty, judgment, claim, deficiency and expense (including interest,
penalties, attorneys' fees and amounts paid in settlement) to which the Lender
may become subject arising out of or based upon the Loan Documents or any Loan.
8.10 Entire Agreement. This Agreement embodies the entire agreement
----------------
between the Borrower and the Lender and supersedes all prior proposals,
agreements and understandings relating to the subject matter hereof. The
attached Glossary is incorporated herein by reference, but this Agreement shall
govern in the event of any conflict.
8.11 Severability. If any provision of any Loan Documents shall be
------------
invalid, illegal or unenforceable in any respect under any applicable law, the
validity, legality and enforceability of the remaining provisions shall be
affected or impaired thereby.
8.12 Disclosures. Every reference in the Loan Documents to disclosures of
-----------
the Borrower to the Lender in writing, to the extent that such references refer
to disclosures at or prior to the execution of this Agreement, shall be deemed
strictly to refer only to written disclosures delivered to the Lender in an
orderly manner concurrently with the execution hereof.
8.13 Conflict with Other Loan Documents. In the event of any conflict
----------------------------------
between the terms of this Agreement and the terms of any of the other Loan
Documents, the terms of this Agreement shall govern.
8.14 NOTICE TO LENDER UPON BREACH. BORROWER AGREES TO GIVE LENDER WRITTEN
----------------------------
NOTICE OF ANY ACTION OR INACTION BY LENDER OR ANY AGENT OR ATTORNEY OF LENDER IN
CONNECTION WITH THIS AGREEMENT OR THE LOAN THAT MAY BE ACTIONABLE AGAINST LENDER
OR ANY AGENT OR ATTORNEY OF LENDER OR A DEFENSE TO PAYMENT OF THE LOAN FOR ANY
REASON, INCLUDING, BUT NOT LIMITED TO, COMMISSION OF A TORT OR VIOLATION OF ANY
28
<PAGE>
CONTRACTUAL DUTY OR DUTY IMPLIED BY LAW. BORROWER AGREES THAT UNLESS SUCH NOTICE
IS DULY GIVEN AS PROMPTLY AS POSSIBLE (AND IN ANY EVENT WITHIN TEN (10) DAYS)
AFTER BORROWER HAS KNOWLEDGE OR WITH THE EXERCISE OF REASONABLE DILIGENCE SHOULD
HAVE HAD KNOWLEDGE OF ANY SUCH ACTION OR INACTION, BORROWER SHALL NOT ASSERT,
AND BORROWER SHALL BE DEEMED TO HAVE WAIVED, ANY CLAIM OR DEFENSE ARISING
THEREFROM.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be
effective as of the date set forth above.
TRAVIS BOATS & MOTORS, INC.,
a Texas Corporation
By: /s/ Mark T. Walton
------------------------------
Mark T. Walton,
President
FALCON MARINE, INC.
By: /s/ Mark T. Walton
------------------------------
Printed Name:____________________
Title:___________________________
FALCON MARINE ABILENE, INC.
By: /s/ Mark T. Walton
------------------------------
Printed Name:____________________
Title:___________________________
TRAVIS SNOWDEN MARINE, INC.
By: /s/ Mark T. Walton
------------------------------
Printed Name:____________________
Title:___________________________
29
<PAGE>
TRAVIS BOATING CENTER BEAUMONT,
INC.
By: /s/ Mark T. Walton
------------------------------
Printed Name:____________________
Title:___________________________
TRAVIS BOATING CENTER ARLINGTON,
INC.
By: /s/ Mark T. Walton
------------------------------
Printed Name:____________________
Title:___________________________
NATIONSBANK OF TEXAS, N.A.
By: /s/ Mark T. Walton
------------------------------
Printed Name:____________________
Title:___________________________
30
<PAGE>
GLOSSARY
Attached to That Certain Amended and Restated Loan Agreement
------------------------------------------------------------
Between Travis Boats & Motors, Inc., et al.
-------------------------------------------
Unless a particular word or phrase is otherwise defined or the context
otherwise requires, capitalized wards and phrases used in Loan Documents have
the meanings provided below.
Affiliate shall mean any Person controlling, controlled by or under common
---------
control with any other Person. For purposes of this definition, "control"
(including "controlled by" and "under common control with") means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or otherwise.
Annual Reviewed Financial Statements shall mean the annual financial
------------------------------------
statements of a Person, including all notes thereto, which statements shall
include a balance sheet as of the end of such fiscal year and an income
statement and a statement of changes in financial position for such fiscal year,
all setting forth in comparative form the corresponding figures from the
previous fiscal year, all prepared in conformity with Generally Accepted
Accounting Principles and accompanied by a report that such statements were
reviewed by such accountants from books maintained by Borrower, but without
expressing any opinion thereon.
Borrower's Subsidiary shall mean a Subsidiary of any of the companies
-----------------------------------------------
comprising the Borrower.
- -----------------------
Business Day shall mean a day when the main office of the Lender is open
------------
for business in San Antonio, Texas.
Chapter One shall mean Chapter One of the Texas Credit Code, as in effect
-----------
on the date the document using such term was executed.
Collateral shall mean all Property, tangible or intangible; real, personal
----------
or mixed, now or hereafter subject to the Security Documents, or intended so to
be.
Commitment shall mean any commitment to lend funds under the Agreement
----------
which references this Glossary.
Corporation shall mean corporations, partnerships, joint ventures, joint
-----------
stock associations, business trusts and other business entities.
Event of Default shall mean any of the events specified as an Event of
----------------
Default in any Loan Documents, provided that there has been satisfied any
31
<PAGE>
requirement in connection with such event for the giving of notice, or the lapse
of time, or the happening of any further condition, event or act, and Default
-------
shall mean any of such events, whether or not any such requirement has been
satisfied.
Financing Statement shall mean all such Uniform Commercial Code financing
-------------------
statements as the Lender shall require, in Property Form, duly executed by the
Borrower or others to give notice of and to perfect or continue perfections of
the Lender's security interest in all Collateral.
Generally Accepted Accounting Principles shall mean, as to a particular
----------------------------------------
Person, such accounting practice as, in the opinion of the independent
accountants of recognized national standing regularly retained by such Person
and acceptable to the Lender, conforms at the time to generally accepted
accounting principles, consistently applied. Generally Accepted Accounting
Principles means those principles and practices (a) which are recognized as such
by the Financial Accounting Standards Board, (b) which are applied for all
periods after the date hereof in a manner consistent with the manner in which
such principles and practices were applied to the most recent audited financial
statements of the relevant Person furnished to the Lender, and (c) which are
consistently applied for all periods after the date hereof so as to reflect
properly the financial condition, and results of operations and changes in
financial position, of such Person. If any change in any accounting principle or
practice is required by the Financial Accounting Standards Board in order for
such principle or practice, all reports and financial statements required
hereunder may be prepared in accordance with such change only after written
notice of such change is given to the Lender.
Governmental Authority shall mean any foreign governmental authority, the
----------------------
United States of America, any State of the United States and any political
subdivision of any of the foregoing, and any agency, department, commission,
board, bureau or court having jurisdiction over the Lender or the Borrower or
their respective assets or Property.
Guarantor (whether one or more) shall mean each Person executing a Guaranty
---------
guaranteeing the Indebtedness of the Borrower to the Lender.
Guaranty shall mean each Guaranty executed or to be executed by any
--------
Guarantor in favor of the Lender.
Highest Lawful Rate shall mean the maximum nonusurious rate of interest
-------------------
permitted to be charged by applicable federal or Texas law (whichever shall
permit the higher lawful rate) from time to time in effect. At all times, if
any, as Chapter One shall establish the Highest Lawful Rate, the Highest Lawful
Rate shall be the "indicated rate ceiling" (as defined in Chapter One) from time
to time in effect. If the obligation is an open-end account, the Lender may from
time to time, as to then-current and future balances, implement any other
ceiling under Chapter One and/or revise the index, formula or provision of law
used to compute the rate on
32
<PAGE>
such obligation, if and to the extent permitted by, and in the manner provided
in, Chapter One.
Indebtedness shall mean and include (l) all items which in accordance with
------------
Generally Accepted Accounting Principles would be included on the liability side
of a balance sheet on the date as of which Indebtedness is to be determined
(excluding capital stock, surplus, surplus reserves and deferred credits), (2)
all guaranties, endorsements and other contingent obligations in respect of, or
any obligations to purchase or otherwise acquire, Indebtedness of others, and
(3) all Indebtedness secured by any Lien existing on any interest of the Person
with respect to which Indebtedness is being determined in Property owned subject
to such Lien whether or not the Indebtedness secured thereby shall have been
assumed; provided, that such term shall not mean or include any Indebtedness in
--------
respect of which monies sufficient to pay and discharge the same in full (either
on the expressed date of maturity thereof or on such earlier date as such
Indebtedness may be duly called for redemption and payment) shall be deposited
with a depository, agency or trustee acceptable to the lender in trust for the
payment thereof.
Investment shall mean the purchase or other acquisition of any securities
----------
or Indebtedness of, or the making of any loan, advance, transfer of Property or
capital contribution to, or the incurring of any liability, contingently or
otherwise, in respect of the Indebtedness of, any Person.
Legal Requirement shall mean any law, statute, ordinance, decree,
-----------------
requirement, order, judgment, rule, regulation (or interpretation of any of the
foregoing) of, and the terms of any license or permit issued by, any
Governmental Authority.
Lien shall mean any mortgage, pledge, charge, encumbrance, security
----
interest, collateral assignment or other lien or restriction of any kind,
whether based on common law, constitutional provision, statute or contract, and
shall include reservations, exceptions, encroachments, easements, rights of way,
covenants, conditions, restrictions, leases and other title exceptions.
Loan shall mean each advance of funds pursuant to the agreement which
----
references this Glossary.
Loan Documents shall mean any agreement (including, without limitation,
--------------
this Agreement) evidencing the obligation of the Lender to make Loans, the
Notes, each Guaranty, all Security Documents, all instruments, certificates and
agreement now or hereafter executed or delivered to the Lender pursuant to any
of the foregoing, and all amendments, modifications, renewal, extension,
increases and rearrangement of, and substitutions for, any of the foregoing.
Notes shall mean all promissory notes executed or to be executed by the
-----
Borrower and payable to the order of the Lender in connection with this
Agreement.
33
<PAGE>
Organizational Documents shall mean, with respect to a corporation, the
------------------------
certificate of incorporation, articles of incorporation and bylaws of such
corporation; with respect to a partnership, the partnership agreement
establishing such partnership; with respect to a joint venture, the joint
venture agreement establishing such joint venture; and with respect to a trust,
the instrument establishing such trust; in each case including any and all
modifications thereof as of the date of the Loan Documents referring to such
Organizational Document and any and all future modifications thereof which are
consented to by the Lender.
Parties shall mean all Persons other than the Lender executing any Loan
-------
Document.
Past Due Rate shall mean the Highest Lawful Rate, or if applicable law
-------------
shall not provide for a maximum nonusurious rate, at a rate per annum equal to
the Prime Rate plus five percent (5%).
Person shall mean any individual, partnership, Corporation, trust,
------
unincorporated organization, Governmental Authority or any other form of entity.
Prime Rate shall mean the prime rate as announced from time to time by the
----------
Lender and thereafter entered in the minutes of the Lender's Loan and Discount
Committee. Without notice to the Borrower or any other Person, the Prime Rate
shall change automatically from time to time as and in the amount by which said
prime rate shall fluctuate, with each such change to be effective as of the date
of each change in such prime rate. Such rate is solely used as an index, and no
representation or warranty, either expressed or implied, is made that the Prime
Rate is the lowest rate being charged by Lender to all borrowers.
Proper Form shall mean in form and substance satisfactory to the Lender.
-----------
Property shall mean any interest in any kind of property or asset, whether real,
- --------
personal or mixed, tangible or intangible.
Revolving Loan shall mean a Loan under Revolving Credit Facility #1 or
--------------
Revolving Credit Facility #2 which may be repaid and re-borrowed any number of
times by the Borrower prior to the maturity of the Revolving Notes.
Revolving Note shall mean the promissory note of the Borrower evidencing a
--------------
Revolving Loan and all promissory notes given in substitution therefor or in
renewal, extension or modification thereof, in whole or in part.
Security Agreements shall mean all the security agreements in favor of the
-------------------
Lender in connection with the Loan, covering the Property therein described and
securing the Loan, including without limitation, all security agreements
executed by the Borrower.
34
<PAGE>
Security Documents shall mean any agreement evidencing the commitment
------------------
of the Lender to make the Loan, the Security Agreements, each Guaranty and any
and all other agreements, deeds of trust, mortgages, chattel mortgages, security
agreements, pledges, guaranties, assignments of production or proceeds of
production, assignments of income, assignments of contract rights, assignments
of partnership interest, assignments of royalty interests, assignments of
performance, completion of surety bonds, standby agreements, subordination
agreements, undertakings and other instruments and Financing Statements now or
hereafter executed and delivered by any Person (other than solely by the Lender
and/or any other creditor participating in the Loan evidenced by the Notes or
any collateral or security therefor) in connection with, or as security for the
payment or performance of, the Notes or any Guaranty.
Subsidiary shall mean, as to a particular parent Corporation, any
----------
Corporation of which fifty percent (50%) or more of the indicated of equity
rights (whether outstanding capital stock or otherwise) is at the time directly
or indirectly owned by such parent Corporation, or by one or more of its
Affiliates.
The following terms shall have the respective meanings ascribed to them in
the Uniform Commercial Code as enacted and in force in the State of Texas on the
date of the document which references this Glossary:
accessions, continuation statement, fixtures, general intangibles,
proceeds, security interest and security agreement.
35
<PAGE>
Exhibit "A"
Compliance Certificate
(Loan Agreement, Section 5.10)
Date: ______________________________
For the quarter ended: ______________________________
NationsBank of Texas, N.A.
P.O. Box 300
San Antonio, Texas 78291
Re: That certain Amended and Restated Loan Agreement dated September 15, 1995
by and between Travis Boats & Motors, Inc., a Texas corporation, Falcon
Marine, Inc., a Texas corporation, Falcon Marine Abilene, Inc., a Texas
corporation, Travis Snowden Marine, Inc., a Texas corporation, Travis
Boating Center Beaumont, Inc., a Texas corporation, and Travis Boating
Center Arlington, Inc., a Texas corporation (collectively the "Borrower")
and NationsBank of Texas, N.A. ("Lender") (the "Loan Agreement").
Gentlemen:
Pursuant to Section 5.10 of the Loan Agreement, the Borrower is required to
issue this certificate of compliance. Accordingly, the undersigned hereby
certifies, to the best of the undersigned's knowledge after reasonably diligent
inquiry, as follows:
1. A review of the activities of Borrower during the accounting period ending
__________________ has been made under my supervision. The Borrower has kept,
observed, performed, and fulfilled all of the covenants, terms, and obligations
under the Loan Agreement, except: ____________________________________________
______________________________________________________________________________
2. The representations and warrants stated in the Loan Agreement continue to
be true, except: ______________________________________________________________
_______________________________________________________________________________
3. The accompanying financial statements and supporting financial data have
been prepared according to GAAP and fairly and accurately present the financial
condition and results of operations of Borrower and Borrower's Subsidiaries.
#4 - #8 tested on a consolidated basis for Borrower and all of
Borrower's subsidiaries
4. Section 5.9(a) of the Loan Agreement. Borrower has maintained a
Consolidated Tangible Net Worth of at least $2,500,000.00 at all times during
the period beginning ________________________ and ending ______________________.
Borrower's current Consolidated Tangible Net Worth is as follows:
a) Net Worth ___________________
b) Less Intangible Assets ___________________
c) Tangible Net Worth (a - b) ___________________
5. Section 5.9(b) of the Loan Agreement. Borrower currently has a Current
Maturities Coverage Ratio greater than 1.5 to 1.0 tested on a rolling four
quarters basis. The "Current Maturities Coverage Ratio" means the ratio of the
Borrower's net income after taxes for the Prior Period (as defined below) plus
amortization expense and depreciation expense for the Prior Period, divided by
the sum of the Borrower's current maturities of long term debt (excluding the
current maturities of any unamortized portion of any long term indebtedness to
the Lender that becomes due and payable to the Lender at the maturity of such
debt) for the Prior Period plus current maturities of capital leases for the
Prior Period plus any dividends or distributions to shareholders made during the
Prior Period.
Page 1 of 2
<PAGE>
The term "Prior Period" shall mean the previous four calendar quarters. The
calculation of Borrower's current Current Maturities Coverage Ratio is as
follows:
a) Net Income after Taxes: _______________
b) Depreciation and amortization expense: _______________
c) Available Cash Flow (a + b): _______________
d) Dividends/Distributions paid to shareholders: _______________
e) Current Maturities of long term debt and current
maturities of capital leases: _______________
f) Total Current Maturities and Dividends (d + e): _______________
g)Current Maturity Coverage (c divided by f): _______________
6. Section 6.5(b) of the Loan Agreement. Maximum annual dividends limited to
$25,000.00.
The total of all dividends paid by Borrower and Borrower's Subsidiaries to
date during the fiscal year to end _____-_____-_____ is $________________.
7. Section 6.10 of the Loan Agreement. Maximum annual capital expenditures of
$500,000.00.
The total of all capital expenditures by Borrower and Borrower's
Subsidiaries to date during the fiscal year to end _____-_____-_____ is
$________________.
Sincerely,
Borrower
By: ______________________________________
Printed Name: Michael B. Perrine
Title: Chief Financial Officer
Page 2 of 2
<PAGE>
Exhibit "B"
Borrowing Base Certificate
Loan Agreement Section 5.11
Date: __________________________
For the month ended: __________________________
NationsBank of Texas, N.A.
P.O. Box 300
San Antonio, Texas 78291
Re: That certain Amended and Restated Loan Agreement dated September 15, 1995
by and between Travis Boats & Motors, Inc., a Texas corporation, Falcon
Marine, Inc., a Texas corporation, Falcon Marine Abilene, Inc., a Texas
corporation, Travis Snowden Marine, Inc., a Texas corporation, Travis
Boating Center Beaumont, Inc., a Texas corporation, and Travis Boating
Center Arlington, Inc., a Texas corporation (collectively the "Borrower")
and NationsBank of Texas, N.A. ("Lender") (the "Loan Agreement").
Gentlemen:
Pursuant to Section 5.11 of the Loan Agreement, the Borrower is required to
issue a borrowing base certificate for the Revolving Credit Facility #2 (parts
and accessories line of credit). I hereby certify that the computation of the
borrowing base set forth below complies with, and has been prepared from the
financial statements of the Borrower in accordance with, generally accepted
accounting principles, and fairly and accurately represents the status of the
inventory eligible to be included in Borrowing Base #2 as of the month and date
stated above. The information contained in this borrowing base report is true
and correct to the best of my knowledge and belief and meets the requirements of
the Loan Agreement.
1. Total Cost to Borrower of Eligible Parts and Accessories
Inventory of Borrower: $__________
2. Advance Rate: 50%
3. Parts and Accessories Borrowing Base (1 multiplied by 2): $__________
4. Line Cap: $500,000.00
5. Current balance on Revolving Credit Facility #2: $__________
6. Availability / (Deficiency) (Lesser of #3
or #4, minus #5): $__________
* Revolving Line of Credit #2 shall have no outstanding balance for a minimum
of 30 consecutive days during each fiscal year.
** If the amount on line 6 is negative, Revolving Line of Credit #2 must be
reduced by this amount within ten (10) business days.
Sincerely,
Borrower
By: ______________________________________
Printed Name: Michael B. Perrine
Title: Chief Financial Officer
Page 1 0f 1
<PAGE>
Exhibit 10.11
GENERAL PROMISSORY NOTE
(Including Security Agreement and Payment Schedule)
$300,000.00 Austin, Texas AUGUST 31, 1995
For value received, Travis Boats & Motors, Inc., a Texas Corporation hereby
promises to pay to Amerisure Property & Casualty, Ltd. or order, principal sum
of THREE HUNDRED THOUSANDS DOLLARS ($300,000.00), with interest from the Date of
this Note to maturity at the varying rate of New York Prime as announced from
time to time in the Wall Street Journal PLUS one/quarter percent per annum
(current Prime is 8.5% thus such current Note rate being 8.75%), with both
interest and principal payable at:
13045 Research Blvd., Austin, Texas 78750
This Note is payable as follows: QUARTERLY PAYMENTS OF INTEREST ONLY. ALL
OUTSTANDING PRINCIPAL AND INTEREST, IF ANY, SHALL BE DUE AND PAYABLE IN FULL AT
THE FINAL MATURITY DATE OF OCTOBER 1, 1996.
All sums past due under terms of this Note shall bear interest at the rate of
TEN Percent (10.0%) per annum.
This Note is UNSECURED.
It is agreed that in the event of failure to pay when due any installment of
principal or interest of this Note, or in the event of failure to keep and
perform any of the covenants or agreements contained in the aforementioned
instrument, all of the unpaid principal balance hereof, together with earned and
unpaid interest, shall, at the election of the holder hereof, and without
notice, immediately become due and payable. Maker hereby waives demand and
presentation for payment, notice of non-payment, and the diligence of bringing
suit against any party hereto and consents that time of payment may be extended
from time to time without notice thereof to Maker. If this Notice is placed in
the hands of an attorney for collection, or if collected by suit, or through
probate, bankruptcy, or other court proceedings, the undersigned agrees to pay
all reasonable attorney fees.
MAKER:
/s/ Michael B. Perrine
----------------------------
TRAVIS BOATS & MOTORS, INC
<PAGE>
EXHIBIT 10.12
GENERAL PROMISSORY NOTE
(Including Security Agreement and Payment Schedule)
$100,000.00 Austin, Texas AUGUST 31,1995
For value received, Travis Boats & Motors, Inc., a Texas Corporation hereby
promises to pay to Capitol Commerce Reporter, Inc. or order, the principal sum
of: ONE HUNDRED THOUSAND DOLLARS ($100,000.00), with interest from the Date of
this Note to maturity at the varying rate of New York Prime as announced from
time to time in the Wall Street Journal MINUS one/quarter percent per annum
(current Prime is 8.5% thus such current Note rate being 8.25%), with both
interest and principal payable at:
1301 South IH 35, Suite 100, Austin, Texas 78767
This Note is payable as follows: QUATERLY PAYMENTS OF INTEREST ONLY. ALL
OUTSTANDING PRINCIPAL AND INTEREST, IF ANY, SHALL BE DUE AND PAYABLE IN FULL AT
THE FINAL MATURITY DATE OF OCTOBER 1, 1996.
All sums past due under terms of this Note shall bear interest at the rate of
TEN Percent (10.0%) per annum.
This Note is UNSECURED.
It is agreed that in the event of failure to pay when due any installment of
principal or interest of this Note, or in event of failure to keep and perform
any of the covenants or agreements contained in the aforementioned instrument,
all of the unpaid principal balance hereof, together with earned and unpaid
interest, shall, at the election of the holder hereof, and without notice,
immediately become due and payable. Maker hereby waives demand and presentation
for payment, notice of non-payment, and the diligence of bringing suit against
any party hereto and consents that time of payment may be extended from time to
time without notice thereof to Maker. If this Note is placed in the hands of an
attorney for collection, or if collected by suit, or through probate,
bankruptcy, or other court proceedings, the undersigned agrees to pay all
reasonable attorney fees.
THIS IS A RENEWAL AND REPLACEMENT OF THAT CERTAIN PROMISSORY NOTE DATED AS OF
12/31/94 WITH A STATED MATURITY OF 1/1/96
MAKER
[SIGNATURE ILLEGIBLE]
---------------------------
TRAVIS BOATS & MOTORS, INC.
<PAGE>
EXHIBIT 10.13
GENERAL PROMISSORY NOTE
(Including Security Agreement and Payment Schedule)
$75,000.00 Austin, Texas AUGUST 31, 1995
For value received, Travis Boats & Motors, Inc., a Texas Corporation hereby
promises to pay to Capitol Commerce Reporter, Inc. or order, the principal sum
of: SEVENTY-FIVE THOUSAND DOLLARS ($75,000.00), with interest from the Date of
this Note to maturity at the varying rate of New York Prime as announced from
time to time in the Wall Street Journal MINUS one/quarter percent per annum
(current Prime is 8.5% thus such current Note rate being 8.25%), with both
interest and principal payable at:
1301 South IH 35, Suite 100, Austin, Texas 78767
This Note is payable as follows: QUARTERLY PAYMENTS OF INTEREST ONLY. ALL
OUTSTANDING PRINCIPAL AND INTEREST, IF ANY, SHALL BE DUE AND PAYABLE IN FULL AT
THE FINAL MATURITY DATE OF OCTOBER 1, 1996.
All sums past due under terms of this Note shall bear interest at the rate of
TEN Percent (10.0%) per annum.
This Note is UNSECURED.
It is agreed that in the event of failure to pay when due any installment of
principal or interest of this Note, or in the event of failure to keep and
perform any of the covenants or agreements contained in the aforementioned
instrument, all of the unpaid principal balance hereof, together with earned and
unpaid interest, shall, at the election of the holder hereof, and without
notice, immediately become due and payable. Maker hereby waives demand and
presentation for payment, notice of non-payment, and the diligence of bringing
suit against any party hereto and consents that time of payment may be extended
from time to time without notice thereof to Maker. If this Note is placed in the
hands of an attorney for collection, or if collected by suit, or through
probate, bankruptcy, or other court proceedings, the undersigned agrees to pay
all reasonable attorney fees.
THIS IS A RENEWAL AND REPLACEMENT OF THAT CERTAIN PROMISSORY NOTE DATED AS OF
12/31/94 WITH A STATED MATURITY OF 1/1/96.
MAKER:
/s/ SIGNATURE ILLEGIBLE
---------------------------
TRAVIS BOATS & MOTORS, INC.
<PAGE>
EXHIBIT 10.14
GENERAL PROMISSORY NOTE
(Including Security Agreement and Payment Schedule)
$150,000.00 Austin, Texas AUGUST 31,1995
For value received, Travis Boats & Motors, Inc., a Texas Corporation hereby
promises to pay to Joe Simpson and Pat Simpson or order, the collective
principal sum of: ONE HUNDRED FIFTY THOUSAND DOLLARS ($150,000.00), with
interest from the Date of this Note to maturity at the varying rate of New York
Prime as announced from time to time in the Wall Street Journal MINUS
one/quarter percent per annum (current Prime is 8.5% thus such current Note rate
being 8.25%), with both interest and principal payable at:
1301 South IH 35, Suite 100, Austin, Texas 78767
This Note is payable as follows: QUARTERLY PAYMENTS OF INTEREST ONLY. ALL
OUTSTANDING PRINCIPAL AND INTEREST, IF ANY, SHALL BE DUE AND PAYABLE IN FULL AT
THE FINAL MATURITY DATE OF OCTOBER 1, 1996.
All sums past due under terms of this Note shall bear interest at the rate of
TEN Percent (10.0%) per annum.
This Note is UNSECURED.
It is agreed that in the event of failure to pay when due any installment of
principal or interest of this Note, or in event of failure to keep and perform
any of the covenants or agreements contained in the aforementioned instrument,
all of the unpaid principal balance hereof, together with earned and unpaid
interest, shall, at the election of the holder hereof, and without notice,
immediately become due and payable. Maker hereby waives demand and presentation
for payment, notice of non-payment, and the diligence of bringing suit against
any party hereto and consents that time of payment may be extended from time to
time without notice thereof to Maker. If this Note is placed in the hands of an
attorney for collection, or if collected by suit, or through probate,
bankruptcy, or other court proceedings, the undersigned agrees to pay all
reasonable attorney fees.
THIS IS A RENEWAL AND REPLACEMENT OF THOSE CERTAIN PROMISSORY NOTES IN THE
AMOUNT OF $100,000 DATED AS OF 1/1/95 WITH A STATED MATURITY OF 1/1/96 AND IN
THE AMOUNT OF $50,000 DATED AS OF 3/31/95 WITH A STATED MATURITY OF 1/1/96
MAKER
[SIGNATURE ILLEGIBLE]
---------------------------
TRAVIS BOATS & MOTORS, INC.
<PAGE>
EXHIBIT 10.20
TRAVIS BOATS
&
MOTORS, INC.
1995 INCENTIVE PLAN
<PAGE>
TABLE OF CONTENTS
-----------------
SECTION 1. DEFINITIONS............................................... 1
SECTION 2. SHARES OF STOCK SUBJECT TO THE PLAN....................... 7
2.1 Maximum Number of Shares.................................. 7
2.2 Limitation of Shares 8
2.3 Description of Shares..................................... 9
2.4 Registration and Listing of Shares........................ 9
SECTION 3. ADMINISTRATION OF THE PLAN................................ 9
3.1 Committee................................................. 9
3.2 Duration, Removal, Etc.................................... 10
3.3 Meetings and Actions of Committee......................... 10
3.4 Committee's Powers........................................ 10
SECTION 4. ELIGIBILITY AND PARTICIPATION............................. 11
4.1 Eligible Individuals...................................... 11
4.2 Grant of Awards........................................... 11
4.3 Date of Grant............................................. 11
4.4 Award Agreements.......................................... 12
4.5 Limitation for Incentive Options.......................... 12
4.6 No Right to Award......................................... 12
SECTION 5. TERMS AND CONDITIONS OF OPTIONS........................... 12
5.1 Number of Shares.......................................... 12
5.2 Vesting................................................... 12
5.3 Expiration of Options..................................... 12
5.4 Exercise Price............................................ 13
5.5 Method of Exercise........................................ 13
5.6 Incentive Option Exercises................................ 13
5.7 Medium and Time of Payment................................ 13
5.8 Payment with Sale Proceeds................................ 13
5.9 Payment of Taxes.......................................... 14
5.10 Limitation on Aggregate Value of Shares That May
Become First Exercisable During Any Calendar Year
Under an Incentive Option................................. 14
5.11 No Fractional Shares...................................... 15
5.12 Modification, Extension, and Renewal of Options........... 15
5.13 Other Agreement Provisions................................ 15
<PAGE>
SECTION 6. STOCK APPRECIATION RIGHTS................................. 16
6.1 Form of Right............................................. 16
6.2 Rights Related to Options................................. 16
(a) Exercise and Transfer................................. 16
(b) Value of Right........................................ 16
6.3 Right Without Option...................................... 16
(a) Number of Shares...................................... 17
(b) Vesting............................................... 17
(c) Expiration of Rights.................................. 17
(d) Value of Right........................................ 17
6.4 Limitations on Rights..................................... 17
6.5 Payment of Rights......................................... 17
6.6 Payment of Taxes.......................................... 17
6.7 Other Agreement Provisions................................ 18
SECTION 7. RESTRICTED STOCK AWARDS................................... 18
7.1 Restrictions.............................................. 18
(a) Transferability....................................... 18
(b) Conditions to Removal of Restrictions................. 18
(c) Legend................................................ 18
(d) Possession............................................ 19
(e) Other Conditions...................................... 19
7.2 Expiration of Restrictions................................ 19
7.3 Rights as Stockholder..................................... 19
7.4 Payment of Taxes.......................................... 19
7.5 Other Agreement Provisions................................ 20
SECTION 8. AWARDS TO NON-EMPLOYEE DIRECTORS.......................... 20
8.1 Ineligibility for Other Awards............................ 20
8.2 Automatic Grant of Awards................................. 20
8.3 Vesting................................................... 20
8.4 Available Stock........................................... 20
SECTION 9. ADJUSTMENT PROVISIONS..................................... 21
9.1 Adjustment of Awards and Authorized Stock................. 21
9.2 Changes in Control........................................ 22
9.3 Restructuring Without Change in Control................... 22
9.4 Notice of Restructuring................................... 24
SECTION 10. ADDITIONAL PROVISIONS..................................... 24
10.1 Termination of Employment................................. 24
10.2 Other Loss of Eligibility - Non Employees................. 25
10.3 Death..................................................... 25
10.4 Disability................................................ 25
10.5 Leave of Absence.......................................... 26
ii
<PAGE>
10.6 Transferability of Awards................................. 26
10.7 Forfeiture and Restrictions on Transfer................... 26
10.8 Delivery of Certificates of Stock......................... 26
10.9 Conditions to Delivery of Stock........................... 27
10.10 Certain Directors and Officers............................ 27
10.11 Securities Act Legend..................................... 27
10.12 Legend for Restrictions on Transfer....................... 28
10.13 Rights as a Stockholder................................... 28
10.14 Furnish Information....................................... 29
10.15 Obligation to Exercise.................................... 29
10.16 Adjustments to Awards..................................... 29
10.17 Remedies.................................................. 29
10.18 Information Confidential.................................. 29
10.19 Consideration............................................. 29
SECTION 11. DURATION AND AMENDMENT OF PLAN............................ 30
11.1 Duration.................................................. 30
11.2 Amendment................................................. 30
SECTION 12. GENERAL................................................... 30
12.1 Application of Funds...................................... 30
12.2 Right of the Corporation and Subsidiaries to Terminate
Employment................................................ 30
12.3 No Liability for Good Faith Determinations................ 30
12.4 Other Benefits............................................ 31
12.5 Exclusion From Pension and Profit-Sharing Compensation.... 31
12.6 Execution of Receipts and Releases........................ 31
12.7 Unfunded Plan............................................. 31
12.8 No Guarantee of Interests................................. 32
12.9 Payment of Expenses....................................... 32
12.10 Corporation Records....................................... 32
12.11 Information............................................... 32
12.12 No Liability of Corporation............................... 32
12.13 Corporation Action........................................ 32
12.14 Severability.............................................. 32
12.15 Notices................................................... 33
12.16 Successors................................................ 33
12.17 Headings.................................................. 33
12.18 Governing Law............................................. 33
12.19 Word Usage................................................ 34
iii
<PAGE>
TRAVIS BOATS & MOTORS, INC.
1995 INCENTIVE PLAN
SCOPE AND PURPOSE OF PLAN
-------------------------
Travis Boats & Motors, Inc., a Texas corporation ("Travis Boats" or
"Corporation") has adopted this 1995 Incentive Plan (the "Plan") to provide for
the granting of:
(a) Incentive Options (hereafter defined) to certain Key Employees
(hereafter defined);
(b) Nonstatutory Options (hereafter defined) to certain Key Employees,
Non-Employee Directors (hereafter defined) and other persons;
(c) Restricted Stock Awards (hereafter defined) to certain Key Employees
and other persons; and
(d) Stock Appreciation Rights (hereafter defined) to certain Key Employees
and other persons.
The purpose of the Plan is to provide an incentive for Key Employees and
directors of the Corporation or its Subsidiaries (hereafter defined) to aid the
Corporation in attracting able persons to enter the service of the Corporation
and its Subsidiaries, to extend to them the opportunity to acquire a proprietary
interest in the Corporation so that they will apply their best efforts for the
benefit of the Corporation, and to remain in the service of the Corporation or
its Subsidiaries. This Plan has been adopted by the Board of Directors and
stockholders of the Corporation prior to the registration of any of securities
of the Corporation under the Exchange Act (hereafter defined) and accordingly
amounts paid under the Plan are exempt from the provisions of Section 162(m) of
the Code (hereafter defined).
SECTION 1. DEFINITIONS
1.1 "Acquiring Person" means any Person other than the Corporation,
any Subsidiary of the Corporation, any employee benefit plan of the Corporation
or of a Subsidiary of the Corporation or of a corporation owned directly or
indirectly by the stockholders of the Corporation in substantially the same
proportions as their ownership of Stock of the Corporation, or any trustee or
other fiduciary holding securities under an employee benefit plan of the
Corporation or of a Subsidiary of the Corporation or of a corporation owned
directly or
<PAGE>
indirectly by the stockholders of the Corporation in substantially the same
proportions as their ownership of Stock of the Corporation.
1.2 "Affiliate" means (a) any Person who is directly or indirectly
the beneficial owner of at least 10% of the voting power of the Voting
Securities or (b) any Person controlling, controlled by, or under common control
with the Company or any Person contemplated in clause (a) of this Subsection
1.2.
1.3 "Award" means the grant of any form of Option, Restricted Stock
Award, or Stock Appreciation Right under the Plan, whether granted individually,
in combination, or in tandem, to a Holder pursuant to the terms, conditions, and
limitations that the Committee may establish in order to fulfill the objectives
of the Plan.
1.4 "Award Agreement" means the written agreement between the
Corporation and a Holder evidencing the terms, conditions, and limitations of
the Award granted to that Holder.
1.5 "Board of Directors" means the board of directors of the
Corporation.
1.6 "Business Day" means any day other than a Saturday, a Sunday, or
a day on which banking institutions in the State of Texas are authorized or
obligated by law or executive order to close.
1.7 "Change in Control" means the event that is deemed to have
occurred if:
(a) any Acquiring Person is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Corporation representing fifty percent or more of the
combined voting power of the then outstanding Voting Securities of the
Corporation; or
(b) members of the Incumbent Board cease for any reason to constitute
at least a majority of the Board of Directors; or
(c) a public announcement is made of a tender or exchange offer by any
Acquiring Person for fifty percent or more of the outstanding Voting
Securities of the Corporation, and the Board of Directors approves or fails
to oppose that tender or exchange offer in its statements in Schedule 14D-9
under the Exchange Act; or
(d) the stockholders of the Corporation approve a merger or
consolidation of the Corporation with any other corporation or partnership
(or, if no such approval is required, the consummation of such a merger or
consolidation of the Corporation), other than a merger or consolidation
that would result in the Voting Securities of the Corporation outstanding
immediately before the consummation thereof continuing to represent (either
by remaining outstanding or by being converted into Voting Securities of
the surviving entity or of a parent of the surviving entity) a majority of
the combined
2
<PAGE>
voting power of the Voting Securities of the surviving entity (or its
parent) outstanding immediately after that merger or consolidation; or
(e) the stockholders of the Corporation approve a plan of complete
liquidation of the Corporation or an agreement for the sale or disposition
by the Corporation of all or substantially all the Corporation's assets
(or, if no such approval is required, the consummation of such a
liquidation, sale, or disposition in one transaction or series of related
transactions) other than a liquidation, sale, or disposition of all or
substantially all the Corporation's assets in one transaction or a series
of related transactions to a corporation owned directly or indirectly by
the stockholders of the Corporation in substantially the same proportions
as their ownership of Stock of the Corporation.
1.8 "Code" means the Internal Revenue Code of 1986, as amended.
1.9 "Committee" means the Committee, which Committee shall administer
this Plan and is further described under Section 3.
1.10 "Convertible Securities" means evidences of indebtedness, shares
of capital stock, or other securities that are convertible into or exchangeable
for shares of Stock, either immediately or upon the arrival of a specified date
or the happening of a specified event.
1.11 "Corporation" means Travis Boats & Motors, Inc.
1.12 "Date of Grant" has the meaning given it in Subsection 4.3.
1.13 "Disability" has the meaning given it in Subsection 10.4.
1.14 "Disinterested Person" has the meaning given it in Rule 16b-
3(c)(2)(i).
1.15 "Effective Date" means ____________ ____, 1995.
1.16 "Eligible Individuals" means (a) Key Employees, (b) Non-Employee
Directors only for purposes of Nonstatutory Options pursuant to Section 8, and
(c) any other Person that the Committee designates as eligible for an Award
(other than for Incentive Options) because the Person performs, or has
performed, valuable services for the Corporation or any of its Subsidiaries
(other than services in connection with the offer or sale of securities in a
capital-raising transaction) and the Committee determines that the Person has a
direct and significant effect on the financial development of the Corporation or
any of its Subsidiaries. Notwithstanding the foregoing provisions of this
Subsection 1.16, to ensure that the requirements of the fourth sentence of
Subsection 3.1 are satisfied, the Board of Directors may from time to time
specify individuals who shall not be eligible for the grant of Awards or equity
securities under any plan of the Corporation or its Affiliates. Nevertheless,
the Board of Directors may at any time determine that an individual who has been
so excluded from eligibility shall become eligible for grants of Awards and
grants of such other equity securities under any plans of the
3
<PAGE>
Corporation or its Affiliates so long as that eligibility will not impair the
Plan's satisfaction of the conditions of Rule 16b-3.
1.17 "Employee" means any employee of the Corporation or of any of its
Subsidiaries, including officers and directors of the Corporation who are also
employees of the Corporation or of any of its Subsidiaries.
1.18 "Exchange Act" means the Securities Exchange Act of 1934 and the
rules and regulations promulgated thereunder, or any successor law, as it may be
amended from time to time.
1.19 "Exercise Notice" has the meaning given it in Subsection 5.5.
1.20 "Exercise Price" has the meaning given it in Subsection 5.4.
1.21 "Fair Market Value" means, for a particular day:
(a) If shares of Stock of the same class are listed or admitted to
unlisted trading privileges on any national or regional securities exchange
at the date of determining the Fair Market Value, then the last reported
sale price, regular way, on the composite tape of that exchange on the last
Business Day before the date in question or, if no such sale takes place on
that Business Day, the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to unlisted
trading privileges on that securities exchange; or
(b) If shares of Stock of the same class are not listed or admitted to
unlisted trading privileges as provided in Subsection 1.21(a) and sales
prices for shares of Stock of the same class in the over-the-counter market
are reported by the National Association of Securities Dealers, Inc.
Automated Quotations, Inc. ("NASDAQ") National Market System (or such other
system then in use) at the date of determining the Fair Market Value, then
the last reported sales price so reported on the last Business Day before
the date in question or, if no such sale takes place on that Business Day,
the average of the high bid and low asked prices so reported; or
(c) If shares of Stock of the same class are not listed or admitted to
unlisted trading privileges as provided in Subsection 1.21(a) and sales
prices for shares of Stock of the same class are not reported by the NASDAQ
National Market System (or a similar system then in use) as provided in
Subsection 1.21(b), and if bid and asked prices for shares of Stock of the
same class in the over-the-counter market are reported by NASDAQ (or, if
not so reported, by the National Quotation Bureau Incorporated) at the date
of determining the Fair Market Value, then the average of the high bid and
low asked prices on the last Business Day before the date in question; or
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(d) If shares of Stock of the same class are not listed or admitted to
unlisted trading privileges as provided in Subsection 1.21(a) and sales
prices or bid and asked prices therefor are not reported by NASDAQ (or the
National Quotation Bureau Incorporated) as provided in Subsection 1.21(b)
or Subsection 1.21(c) at the date of determining the Fair Market Value,
then the value determined in good faith by the Committee, which
determination shall be conclusive for all purposes; or
(e) If shares of Stock of the same class are listed or admitted to
unlisted trading privileges as provided in Subsection 1.21(a) or sales
prices or bid and asked prices therefor are reported by NASDAQ (or the
National Quotation Bureau Incorporated) as provided in Subsection 1.22(b)
or Subsection 1.22(c) at the date of determining the Fair Market Value, but
the volume of trading is so low that the Board of Directors determines in
good faith that such prices are not indicative of the fair value of the
Stock, then the value determined in good faith by the Committee, which
determination shall be conclusive for all purposes notwithstanding the
provisions of Subsections 1.21(a), (b), or (c).
For purposes of valuing Incentive Options, the Fair Market Value of Stock shall
be determined without regard to any restriction other than one that, by its
terms, will never lapse. For purposes of the redemption provided for in
Subsection 9.3(d)(v), Fair Market Value shall have the meaning and shall be
determined as set forth above; provided, however, that the Committee, with
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respect to any such redemption, shall have the right to determine that the Fair
Market Value for purposes of the redemption should be an amount measured by the
value of the shares of Stock, other securities, cash, or property otherwise
being received by holders of shares of Stock in connection with the
Restructuring and upon that determination the Committee shall have the power and
authority to determine Fair Market Value for purposes of the redemption based
upon the value of such shares of stock, other securities, cash, or property.
Any such determination by the Committee, as evidenced by a resolution of the
Committee, shall be conclusive for all purposes.
1.22 "Fiscal Year" means the fiscal year of the Corporation ending on
September 30 of each year.
1.23 "Holder" means an Eligible Individual to whom an outstanding
Award has been granted.
1.24 "Incumbent Board" means the individuals who, as of the Effective
Date, constitute the Board of Directors and any other individual who becomes a
director of the Corporation after that date and whose election or appointment by
the Board of Directors or nomination for election by the Corporation's
stockholders was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board.
1.25 "Incentive Option" means an incentive stock option as defined
under Section 422 of the Code and regulations thereunder.
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1.26 "Key Employee" means any Employee whom the Committee identifies
as having a direct and significant effect on the performance of the Corporation
or any of its Subsidiaries.
1.27 "Non-Employee Director" means a director of the Corporation who
while a director is not an Employee.
1.28 "Nonstatutory Option" means a stock option that does not satisfy
the requirements of Section 422 of the Code or that is designated at the Date of
Grant or in the applicable Award Agreement to be an option other than an
Incentive Option.
1.29 "Non-Surviving Event" means an event of Restructuring as
described in either Subsection 1.36(b) or Subsection 1.36(c).
1.30 "Normal Retirement" means the separation of the Holder from
employment with the Corporation and its Subsidiaries with the right to receive
an immediate benefit under a retirement plan approved by the Corporation. If no
such plan exists, Normal Retirement shall mean separation of the Holder from
employment with the Corporation and its Subsidiaries at age 62 or later.
1.31 "Option" means either an Incentive Option or a Nonstatutory
Option, or both.
1.32 "Person" means any person or entity of any nature whatsoever,
specifically including (but not limited to) an individual, a firm, a company, a
corporation, a partnership, a trust, or other entity. A Person, together with
that Person's affiliates and associates (as "affiliate" and "associate" are
defined in Rule 12b-2 under the Exchange Act for purposes of this definition
only), and any Persons acting as a partnership, limited partnership, joint
venture, association, syndicate, or other group (whether or not formally
organized), or otherwise acting jointly or in concert or in a coordinated or
consciously parallel manner (whether or not pursuant to any express agreement),
for the purpose of acquiring, holding, voting, or disposing of securities of the
Corporation with that Person, shall be deemed a single "Person."
1.33 "Plan" means the Corporation's 1995 Incentive Plan, as it may be
amended from time to time.
1.34 "Restricted Stock" means Stock that is nontransferable or subject
to substantial risk of forfeiture until specific conditions are met.
1.35 "Restricted Stock Award" means the grant or purchase, on the
terms and conditions of Section 7 or that the Committee otherwise determines, of
Restricted Stock.
1.36 "Restructuring" means the occurrence of any one or more of the
following:
(a) The merger or consolidation of the Corporation with any Person,
whether effected as a single transaction or a series of related
transactions, with the Corporation remaining the continuing or surviving
entity of that merger or consolidation and the Stock
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remaining outstanding and not changed into or exchanged for stock or other
securities of any other Person or of the Corporation, cash, or other
property;
(b) The merger or consolidation of the Corporation with any Person,
whether effected as a single transaction or a series of related
transactions, with (i) the Corporation not being the continuing or
surviving entity of that merger or consolidation or (ii) the Corporation
remaining the continuing or surviving entity of that merger or
consolidation but all or a part of the outstanding shares of Stock are
changed into or exchanged for stock or other securities of any other Person
or the Corporation, cash, or other property; or
(c) The transfer, directly or indirectly, of all or substantially all
of the assets of the Corporation (whether by sale, merger, consolidation,
liquidation, or otherwise) to any Person, whether effected as a single
transaction or a series of related transactions.
1.37 "Rule 16b-3" means Rule 16b-3 under Section 16(b) of the Exchange
Act as adopted in Exchange Act Release No. 34-29131 (April 26, 1991), or any
successor rule, as it may be amended from time to time.
1.38 "Securities Act" means the Securities Act of 1933 and the rules
and regulations promulgated thereunder, or any successor law, as it may be
amended from time to time.
1.39 "Stock" means the common stock, $.01 par value per share, of
Travis Boats or any other securities that are substituted for the Stock as
provided in Section 9.
1.40 "Stock Appreciation Right" means the right to receive an amount
equal to the excess of the Fair Market Value of a share of Stock (as determined
on the date of exercise) over, as appropriate, the Exercise Price of a related
Option or the Fair Market Value of the Stock on the Date of Grant of the Stock
Appreciation Right.
1.41 "Subsidiary" means, with respect to any Person, any corporation,
or other entity of which a majority of the Voting Securities is owned, directly
or indirectly, by that Person.
1.42 "Total Shares" has the meaning given it in Subsection 9.2.
1.43 "Voting Securities" means any securities that are entitled to
vote generally in the election of directors, in the admission of general
partners or in the selection of any other similar governing body.
SECTION 2. SHARES OF STOCK SUBJECT TO THE PLAN
2.1 Maximum Number of Shares. Subject to the provisions of
------------------------
Subsection 2.2 and Section 9, the aggregate number of shares of Stock that may
be issued or transferred pursuant to Awards under the Plan shall be 150,000
shares.
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2.2 Limitation of Shares. For purposes of the limitations specified
--------------------
in Subsection 2.1, the following principles shall apply:
(a) the following shall count against and decrease the number of
shares of Stock that may be issued for purposes of Subsection 2.1: (i)
shares of Stock subject to outstanding Options, outstanding shares of
Restricted Stock, and shares subject to outstanding Stock Appreciation
Rights granted independent of Options (based on a good faith estimate by
the Corporation or the Committee of the maximum number of shares for which
the Stock Appreciation Right may be settled (assuming payment in full in
shares of Stock)), and (ii) in the case of Options granted in tandem with
Stock Appreciation Rights, the greater of the number of shares of Stock
that would be counted if one or the other alone was outstanding (determined
as described in clause (i) above);
(b) the following shall be added back to the number of shares of Stock
that may be issued for purposes of Subsection 2.1: (i) shares of Stock
with respect to which Options, Stock Appreciation Rights granted
independent of Options, or Restricted Stock Awards expire, are cancelled,
or otherwise terminate without being exercised, converted, or vested, as
applicable, and (ii) in the case of Options granted in tandem with Stock
Appreciation Rights, shares of Stock as to which an Option has been
surrendered in connection with the exercise of a related ("tandem") Stock
Appreciation Right, to the extent the number surrendered exceeds the number
issued upon exercise of the Stock Appreciation Right; provided that, in any
-------- ----
case, the holder of such Awards did not receive any dividends or other
benefits of ownership with respect to the underlying shares being added
back, other than voting rights and the accumulation (but not payment) of
dividends of Stock;
(c) shares of Stock subject to Stock Appreciation Rights granted
independent of Options (calculated as provided in clause (a) above) that
are exercised and paid in cash shall be added back to the number of shares
of Stock that may be issued for purposes of Subsection 2.1, provided that
the Holder of such Stock Appreciation Right did not receive any dividends
or other benefits of ownership, other than voting rights and the
accumulation (but not payment) of dividends, of the shares of Stock subject
to the Stock Appreciation Right;
(d) shares of Stock that are transferred by a Holder of an Award (or
withheld by the Corporation) as full or partial payment to the Corporation
of the purchase price of shares of Stock subject to an Option or the
Corporation's or any Subsidiary's tax withholding obligations shall not be
added back to the number of shares of Stock that may be issued for purposes
of Subsection 2.1 and shall not again be subject to Awards; and
(e) if the number of shares of Stock counted against the number of
shares that may be issued for purposes of Subsection 2.1 is based upon an
estimate made by the Corporation or the Committee as provided in clause (a)
above and the actual number of shares of Stock issued pursuant to the
applicable Award is greater or less than the
8
<PAGE>
estimated number, then, upon such issuance, the number of shares of Stock
that may be issued pursuant to Subsection 2.1 shall be further reduced by
the excess issuance or increased by the shortfall, as applicable.
Notwithstanding the provisions of this Subsection 2.2, no Stock shall be treated
as issuable under the Plan to Eligible Individuals subject to Section 16 of the
Exchange Act if otherwise prohibited from issuance under Rule 16b-3.
2.3 Description of Shares. The shares to be delivered under the Plan
---------------------
shall be made available from (a) authorized but unissued shares of Stock, (b)
Stock held in the treasury of the Corporation, or (c) previously issued shares
of Stock reacquired by the Corporation, including shares purchased on the open
market, in each situation as the Board of Directors or the Committee may
determine from time to time at its sole option.
2.4 Registration and Listing of Shares. From time to time, the Board
----------------------------------
of Directors and appropriate officers of the Corporation shall and are
authorized to take whatever actions are necessary to file required documents
with governmental authorities, stock exchanges, and other appropriate Persons to
make shares of Stock available for issuance pursuant to the exercise of Awards.
SECTION 3. ADMINISTRATION OF THE PLAN
3.1 Committee. The Committee shall administer the Plan with respect
---------
to all Eligible Individuals who are subject to Section 16(b) of the Exchange
Act, but shall not have the power to appoint members of the Committee or to
terminate, modify, or amend the Plan. The Board of Directors may administer the
Plan with respect to all other Eligible Individuals, or may delegate all or part
of that duty to the Committee. Except for references in Subsections 3.1, 3.2
and 3.3, and unless the context otherwise requires, references herein to the
Committee shall also refer to the Board of Directors as administrator of the
Plan for Eligible Individuals who are subject to Section 16(b) of the Exchange
Act. The Committee shall be constituted so that, as long as Stock is registered
under Section 12 of the Exchange Act, each member of the Committee shall be a
Disinterested Person and so that the Plan in all other applicable respects will
qualify transactions related to the Plan for the exemptions from Section 16(b)
of the Exchange Act provided by Rule 16b-3, to the extent exemptions thereunder
may be available. No discretion regarding Awards to Eligible Individuals who
are subject to Section 16(b) of the Exchange Act shall be afforded to a person
who is not a Disinterested Person. The number of Persons that shall constitute
the Committee shall be determined from time to time by a majority of all the
members of the Board of Directors and, unless that majority of the Board of
Directors determines otherwise or Rule 16b-3 is amended to require otherwise,
shall be no less than two Persons. Persons elected to serve on the Committee as
Disinterested Persons shall not be eligible to receive Awards or equity
securities under any plan of the Corporation or its affiliates while they are
serving as members of the Committee; shall not have received Awards or such
equity securities under any plan of the Corporation or its affiliates within one
year before their appointment to the Committee becomes effective; and shall not
be eligible to receive Awards or such equity securities under any plan of the
Corporation or its affiliates for such period
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<PAGE>
following service on the Committee as may be required by Rule 16b-3 for that
person to remain a Disinterested Person, in each case except for Awards or
equity securities granted as provided in paragraphs (c)(2)(i)(A), (B), (C), or
(D) of Rule 16b-3. Notwithstanding the foregoing, the Board of Directors may
designate the Compensation Committee (regardless of its composition) of the
Board of Directors to serve as the Committee hereunder, provided that the Stock
is not registered under Section 12 of the Exchange Act.
3.2 Duration, Removal, Etc. The members of the Committee shall serve
-----------------------
at the discretion of the Board of Directors, which shall have the power, at any
time and from time to time, to remove members from or add members to the
Committee. Removal from the Committee may be with or without cause. Any
individual serving as a member of the Committee shall have the right to resign
from membership in the Committee by at least three days' written notice to the
Board of Directors. The Board of Directors, and not the remaining members of
the Committee, shall have the power and authority to fill all vacancies on the
Committee. The Board of Directors shall promptly fill any vacancy that causes
the number of members of the Committee to be below two or any other number that
Rule 16b-3 may require from time to time.
3.3 Meetings and Actions of Committee. The Board of Directors shall
---------------------------------
designate which of the Committee members shall be the chairman of the Committee.
If the Board of Directors fails to designate a Committee chairman, the members
of the Committee shall elect one of the Committee members as chairman, who shall
act as chairman until he ceases to be a member of the Committee or until the
Board of Directors elects a new chairman. The Committee shall hold its meetings
at those times and places as the chairman of the Committee may determine. At
all meetings of the Committee, a quorum for the transaction of business shall be
required and a quorum shall be deemed present if at least a majority of the
members of the Committee are present. At any meeting of the Committee, each
member shall have one vote. All decisions and determinations of the Committee
shall be made by the majority vote or majority decision of all of its members
present at a meeting at which a quorum is present; provided, however, that any
-------- -------
decision or determination reduced to writing and signed by all of the members of
the Committee shall be as fully effective as if it had been made at a meeting
that was duly called and held. The Committee may make any rules and regulations
for the conduct of its business that are not inconsistent with the provisions of
the Plan, the Articles or Certificate of Incorporation of the Corporation, the
by-laws of the Corporation, and Rule 16b-3 so long as it is applicable, as the
Committee may deem advisable.
3.4 Committee's Powers. Subject to the express provisions of the
------------------
Plan and Rule 16b-3, the Committee shall have the authority, in its sole and
absolute discretion, to (a) adopt, amend, and rescind administrative and
interpretive rules and regulations relating to the Plan; (b) determine the
Eligible Individuals to whom, and the time or times at which, Awards shall be
granted; (c) determine the amount of cash and the number of shares of Stock,
Stock Appreciation Rights, or Restricted Stock Awards, or any combination
thereof, that shall be the subject of each Award; (d) determine the terms and
provisions of each Award Agreement (which need not be identical), including
provisions defining or otherwise relating to (i) the term and the period or
periods and extent of exercisability of the Options, (ii) the extent to which
the
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transferability of shares of Stock issued or transferred pursuant to any Award
is restricted, (iii) the effect of termination of employment of the Holder on
the Award, and (iv) the effect of approved leaves of absence (consistent with
any applicable regulations of the Internal Revenue Service); (e) accelerate,
pursuant to Section 9, the time of exercisability of any Option that has been
granted; (f) construe the respective Award Agreements and the Plan; (g) make
determinations of the Fair Market Value of the Stock pursuant to the Plan; (h)
delegate its duties under the Plan to such agents as it may appoint from time to
time, provided that the Committee may not delegate its duties with respect to
making Awards to, or otherwise with respect to Awards granted to, Eligible
Individuals who are subject to Section 16(b) of the Exchange Act; and (i) make
all other determinations, perform all other acts, and exercise all other powers
and authority necessary or advisable for administering the Plan, including the
delegation of those ministerial acts and responsibilities as the Committee deems
appropriate. Subject to Rule 16b-3, the Committee may correct any defect,
supply any omission, or reconcile any inconsistency in the Plan, in any Award,
or in any Award Agreement in the manner and to the extent it deems necessary or
desirable to carry the Plan into effect, and the Committee shall be the sole and
final judge of that necessity or desirability. The determinations of the
Committee on the matters referred to in this Subsection 3.4 shall be final and
conclusive.
SECTION 4. ELIGIBILITY AND PARTICIPATION
4.1 Eligible Individuals. Awards may be granted pursuant to the Plan
--------------------
only to persons who are Eligible Individuals at the time of the grant thereof.
4.2 Grant of Awards. Subject to the express provisions of the Plan,
---------------
the Committee shall determine which Eligible Individuals shall be granted Awards
from time to time. In making grants, the Committee shall take into
consideration the contribution the potential Holder has made or may make to the
success of the Corporation or its Subsidiaries and such other considerations as
the Board of Directors may from time to time specify. The Committee shall also
determine the number of shares subject to each of the Awards and shall authorize
and cause the Corporation to grant Awards in accordance with those
determinations.
4.3 Date of Grant. The date on which the Committee completes all
-------------
action resolving to offer an Award to an individual, including the specification
of the number of shares of Stock to be subject to the Award, shall be the date
on which the Award covered by an Award Agreement is granted (the "Date of
Grant"), even though certain terms of the Award Agreement may not be determined
at that time and even though the Award Agreement may not be executed until a
later time. In no event shall a Holder gain any rights in addition to those
specified by the Committee in its grant, regardless of the time that may pass
between the grant of the Award and the actual execution of the Award Agreement
by the Corporation and the Holder. Notwithstanding the above provisions of this
Subsection 4.3, the Date of Grant of an Award granted pursuant to Subsection
8.2(a) shall be the Effective Date, the Date of Grant of an Award granted
pursuant to Subsection 8.2(b) shall be the date on which the Holder's election
to the Board of Directors is effective, and the Date of Grant of an Award
granted pursuant to Subsection 8.2(c) shall be the date on which such Award is
granted as provided in such Subsection.
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4.4 Award Agreements. Each Award granted under the Plan shall be
----------------
evidenced by an Award Agreement that is executed by the Corporation and the
Eligible Individual to whom the Award is granted and incorporating those terms
that the Committee shall deem necessary or desirable. More than one Award may
be granted under the Plan to the same Eligible Individual and be outstanding
concurrently. In the event an Eligible Individual is granted both one or more
Incentive Options and one or more Nonstatutory Options, those grants shall be
evidenced by separate Award Agreements, one for each of the Incentive Option
grants and one for each of the Nonstatutory Option grants.
4.5 Limitation for Incentive Options. Notwithstanding any provision
--------------------------------
contained herein to the contrary, (a) a person shall not be eligible to receive
an Incentive Option unless he is an Employee of the Corporation or a corporate
Subsidiary (but not a partnership Subsidiary) and (b) a person shall not be
eligible to receive an Incentive Option if, immediately before the time the
Option is granted, that person owns (within the meaning of Sections 422 and
424(d) of the Code) stock possessing more than ten percent of the total combined
voting power or value of all classes of outstanding stock of the Corporation or
a Subsidiary. Nevertheless, Subsection 4.5(b) shall not apply if, at the time
the Incentive Option is granted, the Exercise Price of the Incentive Option is
at least one hundred ten percent of Fair Market Value and the Incentive Option
is not, by its terms, exercisable after the expiration of five years from the
Date of Grant.
4.6 No Right to Award. The adoption of the Plan shall not be deemed
-----------------
to give any Person a right to be granted an Award.
SECTION 5. TERMS AND CONDITIONS OF OPTIONS
All Options granted under the Plan shall comply with, and the related Award
Agreements shall be deemed to include and be subject to, the terms and
conditions set forth in this Section 5 (to the extent each term and condition
applies to the form of Option) and also to the terms and conditions set forth in
Sections 9 and 10; provided, however, that the Committee may authorize an Award
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Agreement that expressly contains terms and provisions that differ from the
terms and provisions set forth in Subsections 9.2, 9.3, and 9.4 and any of the
terms and provisions of Section 10 (other than Subsections 10.9 and 10.10).
5.1 Number of Shares. Each Award Agreement shall state the total
----------------
number of shares of Stock to which it relates.
5.2 Vesting. Each Award Agreement shall state the time or periods in
-------
which, or the conditions upon satisfaction of which, the right to exercise the
Option or a portion thereof shall vest and the number of shares of Stock for
which the right to exercise the Option shall vest at each such time, period, or
fulfillment of condition.
5.3 Expiration of Options. No Option shall be exercised after the
---------------------
expiration of a period of ten years commencing on the Date of Grant of the
Option; provided, however, that any portion of a Nonstatutory Option that
pursuant to the terms of the Award Agreement under which such Nonstatutory
Option is granted shall not become exercisable until the date which is
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the tenth anniversary of the Date of Grant of such Nonstatutory Option may be
exercisable for a period of 30 days following the date on which such portion
becomes exercisable.
5.4 Exercise Price. Each Award Agreement shall state the exercise
--------------
price per share of Stock (the "Exercise Price"); provided, however, that the
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exercise price per share of Stock subject to an Incentive Option shall not be
less than the greater of (a) the par value per share of the Stock or (b) 100% of
the Fair Market Value per share of the Stock on the Date of Grant of the Option.
5.5 Method of Exercise. The Option shall be exercisable only by
------------------
written notice of exercise (the "Exercise Notice") delivered to the Corporation
during the term of the Option, which notice shall (a) state the number of shares
of Stock with respect to which the Option is being exercised, (b) be signed by
the Holder of the Option or, if the Holder is dead or becomes affected by a
Disability, by the person authorized to exercise the Option pursuant to
Subsections 10.3 and 10.4, (c) be accompanied by the Exercise Price for all
shares of Stock for which the Option is being exercised, and (d) include such
other information, instruments, and documents as may be required to satisfy any
other condition to exercise contained in the Award Agreement. The Option shall
not be deemed to have been exercised unless all of the requirements of the
preceding provisions of this Subsection 5.5 have been satisfied.
5.6 Incentive Option Exercises. Except as otherwise provided in
--------------------------
Subsection 10.4, during the Holder's lifetime, only the Holder may exercise an
Incentive Option.
5.7 Medium and Time of Payment. The Exercise Price of an Option
--------------------------
shall be payable in full upon the exercise of the Option (a) in cash or by an
equivalent means acceptable to the Committee, (b) on the Committee's prior
consent, with shares of Stock owned by the Holder (including shares received
upon exercise of the Option or restricted shares already held by the Holder) and
having a Fair Market Value at least equal to the aggregate Exercise Price
payable in connection with such exercise, or (c) by any combination of clauses
(a) and (b). If the Committee elects to accept shares of Stock in payment of
all or any portion of the Exercise Price, then (for purposes of payment of the
Exercise Price) those shares of Stock shall be deemed to have a cash value equal
to their aggregate Fair Market Value determined as of the date the certificate
for such shares is delivered to the Corporation. If the Committee elects to
accept shares of restricted Stock in payment of all or any portion of the
Exercise Price, then an equal number of shares issued pursuant to the exercise
shall be restricted on the same terms and for the restriction period remaining
on the shares used for payment.
5.8 Payment with Sale Proceeds. In addition, at the request of the
--------------------------
Holder and to the extent permitted by applicable law, the Committee may (but
shall not be required to) approve arrangements with a brokerage firm under which
that brokerage firm, on behalf of the Holder, shall pay to the Corporation the
Exercise Price of the Option being exercised and the Corporation shall promptly
deliver the exercised shares of Stock to the brokerage firm. To accomplish this
transaction, the Holder must deliver to the Corporation an Exercise Notice
containing irrevocable instructions from the Holder to the Corporation to
deliver the Stock certificates representing the shares of Stock directly to the
broker. Upon receiving a copy of
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<PAGE>
the Exercise Notice acknowledged by the Corporation, the broker shall sell that
number of shares of Stock or loan the Holder an amount sufficient to pay the
Exercise Price and any withholding obligations due. The broker then shall
deliver to the Corporation that portion of the sale or loan proceeds necessary
to cover the Exercise Price and any withholding obligations due. The Committee
shall not approve any transaction of this nature if the Committee believes that
the transaction would give rise to the Holder's liability for short-swing
profits under Section 16(b) of the Exchange Act.
5.9 Payment of Taxes. The Committee may, in its discretion, require
----------------
a Holder to pay to the Corporation (or the Corporation's Subsidiary if the
Holder is an employee of a Subsidiary of the Corporation), at the time of the
exercise of an Option or thereafter, the amount that the Committee deems
necessary to satisfy the Corporation's or its Subsidiary's current or future
obligation to withhold federal, state, or local income or other taxes that the
Holder incurs by exercising an Option. In connection with the exercise of an
Option requiring tax withholding, a Holder may (a) direct the Corporation to
withhold from the shares of Stock to be issued to the Holder the number of
shares necessary to satisfy the Corporation's obligation to withhold taxes, that
determination to be based on the shares' Fair Market Value as of the date of
exercise; (b) deliver to the Corporation sufficient shares of Stock (based upon
the Fair Market Value as of the date of such delivery) to satisfy the
Corporation's tax withholding obligations, which tax withholding obligation is
based on the shares' Fair Market Value as of the later of the date of exercise
or the date as of which the shares of Stock issued in connection with such
exercise become includible in the income of the Holder; or (c) deliver
sufficient cash to the Corporation to satisfy its tax withholding obligations.
Holders who elect to use such a stock withholding feature must make the election
at the time and in the manner that the Committee prescribes. The Committee may,
at its sole option, deny any Holder's request to satisfy withholding obligations
through Stock instead of cash. In the event the Committee subsequently
determines that the aggregate Fair Market Value (as determined above) of any
shares of Stock withheld or delivered as payment of any tax withholding
obligation is insufficient to discharge that tax withholding obligation, then
the Holder shall pay to the Corporation, immediately upon the Committee's
request, the amount of that deficiency in the form of payment requested by the
Committee.
5.10 Limitation on Aggregate Value of Shares That May Become First
-------------------------------------------------------------
Exercisable During Any Calendar Year Under an Incentive Option. Except as is
- --------------------------------------------------------------
otherwise provided in Subsection 9.3, with respect to any Incentive Option
granted under this Plan, the aggregate Fair Market Value of shares of Stock
subject to an Incentive Option and the aggregate Fair Market Value of shares of
Stock or stock of any Subsidiary (or a predecessor of the Corporation or a
Subsidiary) subject to any other incentive stock option (within the meaning of
Section 422 of the Code) of the Corporation or its Subsidiaries (or a
predecessor corporation of any such corporation) that first become purchasable
by a Holder in any calendar year may not (with respect to that Holder) exceed
$100,000, or such other amount as may be prescribed under Section 422 of the
Code or applicable regulations or rulings from time to time. As used in the
previous sentence, Fair Market Value shall be determined as of the Date of Grant
of the Incentive Option. For purposes of this Subsection 5.10, "predecessor
corporation" means (a) a corporation that was a party to a transaction described
in Section 424(a) of the Code (or which would be so described if a substitution
or assumption under that Section had been effected) with
14
<PAGE>
the Corporation, (b) a corporation which, at the time the new incentive stock
option (within the meaning of Section 422 of the Code) is granted, is a
Subsidiary of the Corporation or a predecessor corporation of any such
corporations, or (c) a predecessor corporation of any such corporations.
Failure to comply with this provision shall not impair the enforceability or
exercisability of any Option, but shall cause the excess amount of shares to be
reclassified in accordance with the Code.
5.11 No Fractional Shares. The Corporation shall not in any case be
--------------------
required to sell, issue, or deliver a fractional share with respect to any
Option. In lieu of the issuance of any fractional share of Stock, the
Corporation shall pay to the Holder an amount in cash equal to the same fraction
(as the fractional Stock) of the Fair Market Value of a share of Stock
determined as of the date of the applicable Exercise Notice.
5.12 Modification, Extension, and Renewal of Options. Subject to the
-----------------------------------------------
terms and conditions of and within the limitations of the Plan, Rule 16b-3, and
any consent required by the last sentence of this Subsection 5.12, the Committee
may (a) modify, extend, or renew outstanding Options granted under the Plan, (b)
accept the surrender of Options outstanding hereunder (to the extent not
previously exercised) and authorize the granting of new Options in substitution
for outstanding Options (to the extent not previously exercised), and (c) amend
the terms of an Incentive Option at any time to include provisions that have the
effect of changing the Incentive Option to a Nonstatutory Option. Nevertheless,
without the consent of the Holder, the Committee may not modify any outstanding
Options so as to specify a higher or lower Exercise Price or accept the
surrender of outstanding Incentive Options and authorize the granting of new
Options in substitution therefor specifying a higher or lower Exercise Price.
In addition, no modification of an Option granted hereunder shall, without the
consent of the Holder, alter or impair any rights or obligations under any
Option theretofore granted to such Holder under the Plan except, with respect to
Incentive Options, as may be necessary to satisfy the requirements of Section
422 of the Code or as permitted in clause (c) of this Subsection 5.12.
5.13 Other Agreement Provisions. The Award Agreements authorized
--------------------------
under the Plan shall contain such provisions in addition to those required by
the Plan (including without limitation restrictions or the removal of
restrictions upon the exercise of the Option and the retention or transfer of
shares thereby acquired) as the Committee may deem advisable. Each Award
Agreement shall identify the Option evidenced thereby as an Incentive Option or
Nonstatutory Option, as the case may be, and no Award Agreement shall cover both
an Incentive Option and a Nonstatutory Option. Each Award Agreement relating to
an Incentive Option granted hereunder shall contain such limitations and
restrictions upon the exercise of the Incentive Option to which it relates as
shall be necessary for the Incentive Option to which such Award Agreement
relates to constitute an incentive stock option, as defined in Section 422 of
the Code.
15
<PAGE>
SECTION 6. STOCK APPRECIATION RIGHTS
All Stock Appreciation Rights granted under the Plan shall comply
with, and the related Award Agreements shall be deemed to include and be subject
to, the terms and conditions set forth in this Section 6 (to the extent each
term and condition applies to the form of Stock Appreciation Right) and also the
terms and conditions set forth in Sections 9 and 10; provided, however, that the
-------- -------
Committee may authorize an Award Agreement related to a Stock Appreciation Right
that expressly contains terms and provisions that differ from the terms and
provisions set forth in Subsections 9.2, 9.3, and 9.4 and any of the terms and
provisions of Section 10 (other than Subsection 10.10).
6.1 Form of Right. A Stock Appreciation Right may be granted to an
-------------
Eligible Individual (a) in connection with an Option, either at the time of
grant or at any time during the term of the Option, or (b) independent of an
Option.
6.2 Rights Related to Options. A Stock Appreciation Right granted
-------------------------
pursuant to an Option shall entitle the Holder, upon exercise, to surrender that
Option or any portion thereof, to the extent unexercised, and to receive payment
of an amount computed pursuant to Subsection 6.2(b). That Option shall then
cease to be exercisable to the extent surrendered. Stock Appreciation Rights
granted in connection with an Option shall be subject to the terms of the Award
Agreement governing the Option, which shall comply with the following provisions
in addition to those applicable to Options:
(a) Exercise and Transfer. Subject to Subsection 10.9, a Stock
---------------------
Appreciation Right granted in connection with an Option shall be
exercisable only at such time or times and only to the extent that the
related Option is exercisable and shall not be transferable except to the
extent that the related Option is transferable.
(b) Value of Right. Upon the exercise of a Stock Appreciation Right
--------------
related to an Option, the Holder shall be entitled to receive payment from
the Corporation of an amount determined by Multiplying:
(i) The difference obtained by subtracting the Exercise Price of
a share of Stock specified in the related Option from the Fair Market
Value of a share of Stock on the date of exercise of the Stock
Appreciation Right, by
(ii) The number of shares as to which that Stock Appreciation
Right has been exercised.
6.3 Right Without Option. A Stock Appreciation Right granted
--------------------
independent of an Option shall be exercisable as determined by the Committee and
set forth in the Award Agreement governing the Stock Appreciation Right, which
Award Agreement shall comply with the following provisions:
16
<PAGE>
(a) Number of Shares. Each Award Agreement shall state the total
----------------
number of shares of Stock to which the Stock Appreciation Right relates.
(b) Vesting. Each Award Agreement shall state the time or periods in
-------
which the right to exercise the Stock Appreciation Right or a portion
thereof shall vest and the number of shares of Stock for which the right to
exercise the Stock Appreciation Right shall vest at each such time or
period.
(c) Expiration of Rights. Each Award Agreement shall state the date
--------------------
at which the Stock Appreciation Rights shall expire if not previously
exercised.
(d) Value of Right. Each Stock Appreciation Right shall entitle the
--------------
Holder, upon exercise thereof, to receive payment of an amount determined
by multiplying:
(i) The difference obtained by subtracting the Fair Market Value
of a share of Stock on the Date of Grant of the Stock Appreciation
Right from the Fair Market Value of a share of Stock on the date of
exercise of that Stock Appreciation Right, by
(ii) The number of shares as to which the Stock Appreciation
Right has been exercised.
6.4 Limitations on Rights. Notwithstanding Subsections 6.2(b) and
---------------------
6.3(d), the Committee may limit the amount payable upon exercise of a Stock
Appreciation Right. Any such limitation must be determined as of the Date of
Grant and be noted on the Award Agreement evidencing the Holder's Stock
Appreciation Right.
6.5 Payment of Rights. Payment of the amount determined under
-----------------
Subsection 6.2(b) or 6.3(d) and Subsection 6.4 may be made, in the sole
discretion of the Committee unless specifically provided otherwise in the Award
Agreement, solely in whole shares of Stock valued at Fair Market Value on the
date of exercise of the Stock Appreciation Right, solely in cash, or in a
combination of cash and whole shares of Stock. If the Committee decides to make
full payment in shares of Stock and the amount payable results in a fractional
share, payment for the fractional share shall be made in cash.
6.6 Payment of Taxes. The Committee may, in its discretion, require
----------------
a Holder to pay to the Corporation (or the Corporation's Subsidiary if the
Holder is an employee of a Subsidiary of the Corporation), at the time of the
exercise of a Stock Appreciation Right or thereafter, the amount that the
Committee deems necessary to satisfy the Corporation's or its Subsidiary's
current or future obligation to withhold federal, state, or local income or
other taxes that the Holder incurs by exercising a Stock Appreciation Right. In
connection with the exercise of a Stock Appreciation Right requiring tax
withholding, a Holder may (a) direct the Corporation to withhold from the shares
of Stock to be issued to the Holder the number of shares necessary to satisfy
the Corporation's obligation to withhold taxes, that determination to be based
on the shares' Fair Market Value as of the date of exercise; (b) deliver to the
Corporation sufficient
17
<PAGE>
shares of Stock (based upon the Fair Market Value as of the date of such
delivery) to satisfy the Corporation's tax withholding obligations, which tax
withholding obligation is based on the shares' Fair Market Value as of the later
of the date of exercise or the date of which the shares of Stock issued in
connection with such exercise become includible in the income of the Holder; or
(c) deliver sufficient cash to the Corporation to satisfy its tax withholding
obligations. Holders who elect to have Stock withheld pursuant to (a) or (b)
above must make the election at the time and in the manner that the Committee
prescribes. The Committee may, in its sole discretion, deny any Holder's
request to satisfy withholding obligations through Stock instead of cash. In
the event the Committee subsequently determines that the aggregate Fair Market
Value (as determined above) of any shares of Stock withheld or delivered as
payment of any tax withholding obligation is insufficient to discharge that tax
withholding obligation, then the Holder shall pay to the Corporation,
immediately upon the Committee's request, the amount of that deficiency in the
form of payment requested by the Commission.
6.7 Other Agreement Provisions. The Award Agreements authorized
--------------------------
relating to Stock Appreciation Rights shall contain such provisions in addition
to those required by the Plan (including without limitation restrictions or the
removal of restrictions upon the exercise of the Stock Appreciation Right and
the retention or transfer of shares thereby acquired) as the Committee may deem
advisable.
SECTION 7. RESTRICTED STOCK AWARDS
All Restricted Stock Awards granted under the Plan shall comply with and be
subject to, and the related Award Agreements shall be deemed to include, the
terms and conditions set forth in this Section 7 and also to the terms and
conditions set forth in Sections 9 and 10; provided, however, that the Committee
-------- -------
may authorize an Award Agreement related to a Restricted Stock Award that
expressly contains terms and provisions that differ from the terms and
provisions set forth in Subsections 9.2, 9.3, and 9.4 and the terms and
provisions set forth in Section 10 (other than Subsections 10.9 and 10.10).
7.1 Restrictions. All shares of Restricted Stock Awards granted or
------------
sold pursuant to the Plan shall be subject to the following conditions:
(a) Transferability. The shares may not be sold, transferred, or
---------------
otherwise alienated or hypothecated until the restrictions are removed or
expire.
(b) Conditions to Removal of Restrictions. Conditions to removal or
-------------------------------------
expiration of the restrictions may include, but are not required to be
limited to, continuing employment or service as a director, officer, or Key
Employee or achievement of performance objectives described in the Award
Agreement.
(c) Legend. Each certificate representing Restricted Stock Awards
------
granted pursuant to the Plan shall bear a legend making appropriate
reference to the restrictions imposed.
18
<PAGE>
(d) Possession. The Committee may require the Corporation to retain
----------
physical custody of the certificates representing Restricted Stock Awards
during the restriction period and may require the Holder of the Award to
execute stock powers in blank for those certificates and deliver those
stock powers to the Corporation, or the Committee may require the Holder to
enter into an escrow agreement providing that the certificates representing
Restricted Stock Awards granted or sold pursuant to the Plan shall remain
in the physical custody of an escrow holder until all restrictions are
removed or expire.
(e) Other Conditions. The Committee may impose other conditions on
----------------
any shares granted or sold as Restricted Stock Awards pursuant to the Plan
as it may deem advisable, including without limitation (i) restrictions
under the Securities Act or Exchange Act, (ii) the requirements of any
securities exchange upon which the shares or shares of the same class are
then listed, and (iii) any state securities law applicable to the shares.
7.2 Expiration of Restrictions. The restrictions imposed in
--------------------------
Subsection 7.1 on Restricted Stock Awards shall lapse as determined by the
Committee and set forth in the applicable Award Agreement, and the Corporation
shall promptly deliver to the Holder of the Restricted Stock Award a certificate
representing the number of shares for which restrictions have lapsed, free of
any restrictive legend relating to the lapsed restrictions. Each Restricted
Stock Award may have a different restriction period as determined by the
Committee in its sole discretion. The Committee may, in its discretion,
prospectively reduce the restriction period applicable to a particular
Restricted Stock Award.
7.3 Rights as Stockholder. Subject to the provisions of Subsections
---------------------
7.1 and 10.10, the Committee may, in its discretion, determine what rights, if
any, the Holder shall have with respect to the Restricted Stock Awards granted
or sold, including the right to vote the shares and receive all dividends and
other distributions paid or made with respect thereto.
7.4 Payment of Taxes. The Committee may, in its discretion, require
----------------
a Holder to pay to the Corporation (or the Corporation's Subsidiary if the
Holder is an employee of a Subsidiary of the Corporation) the amount that the
Committee deems necessary to satisfy the Corporation's or its Subsidiary's
current or future obligation to withhold federal, state, or local income or
other taxes that the Holder incurs by reason of the Restricted Stock Award. The
Holder may (a) direct the Corporation to withhold from the shares of Stock to be
issued to the Holder the number of shares necessary to satisfy the Corporation's
obligation to withhold taxes, that determination to be based on the shares' Fair
Market Value as of the date on which tax withholding is to be made; (b) deliver
to the Corporation sufficient shares of Stock (based upon the Fair Market Value
as of the date of such delivery) to satisfy the Corporation's tax withholding
obligations, which tax withholding obligation is based on the shares' Fair
Market Value as of the later of the date of issuance or the date as of which the
shares of Stock issued become includible in the income of the Holder; or (c)
deliver sufficient cash to the Corporation to satisfy its tax withholding
obligations. Holders who elect to have Stock withheld pursuant to (a) or (b)
above must make the election at the time and in the manner that the Committee
prescribes. The Committee may, in its sole discretion, deny any Holder's
request to satisfy
19
<PAGE>
withholding obligations through Stock instead of cash. In the event the
Committee subsequently determines that the aggregate Fair Market Value (as
determined above) of any shares of Stock withheld or delivered as payment of any
tax withholding obligation is insufficient to discharge that tax withholding
obligation, then the Holder shall pay to the Corporation, immediately upon the
Committee's request, the amount of that deficiency.
7.5 Other Agreement Provisions. The Award Agreements relating to
--------------------------
Restricted Stock Awards shall contain such provisions in addition to those
required by the Plan as the Committee may deem advisable.
SECTION 8. AWARDS TO NON-EMPLOYEE DIRECTORS
Except as otherwise provided in this Section 8 or the applicable Award
Agreement, Awards granted pursuant to this Section 8 shall be subject to the
conditions of Section 5 to the extent permitted under Rule 16b-3.
8.1 Ineligibility for Other Awards. Non-Employee Directors shall not
------------------------------
be eligible to receive any Awards under the Plan other than the Awards specified
in this Section 8.
8.2 Automatic Grant of Awards. Unless any Non-Employee Director (or
-------------------------
director nominee) shall have given written notice to the Corporation that he or
she declines to accept any Award pursuant to this Subsection 8.2 on or prior to
the Date of Grant of such Award, each person who becomes a non-Employee Director
after the Effective Date of this Plan shall automatically be granted, as of the
Effective Date or as the date such person joins the Board of Directors, as the
case may be, Options to purchase 10,000 shares of Stock. Such Options shall
have a per share Exercise Price equal to the Fair Market Value of the Stock on
the date of Grant.
8.3 Vesting. Options granted pursuant to Section 8.2 shall vest
-------
pursuant to the following schedule, and shall be exercisable for a period of ten
years from the date of Grant of the Option:
Vesting Date Percentage of Shares Vested
------------ ---------------------------
First Anniversary of Grant 20%
Second Anniversary of Grant 40%
Third Anniversary of Grant 60%
Fourth Anniversary of Grant 80%
Fifth Anniversary of Grant 100%
8.4 Available Stock. The automatic Awards specified in Subsection
---------------
8.2 shall be made in the amounts specified in Subsection 8.2 only if the number
of shares of Stock available to be issued, transferred or exercised pursuant to
Awards under this Plan (as calculated in Section 2) is sufficient to make all
automatic grants required to be made by Subsection 8.2 on the Date of Grant of
those automatic Awards. In the event that the number of shares of Stock that
are
20
<PAGE>
available to be issued, transferred, or exercised pursuant to Awards under the
Plan on the Date of Grant of the automatic Awards described in Subsection 8.2 is
insufficient to permit the grant of the entire number of shares specified in
Subsection 8.2, then the number of available shares shall be apportioned equally
among the automatic Awards made on that date, and the number of shares
apportioned to each automatic Award shall be the amount of shares automatically
subject to that automatic Award.
SECTION 9. ADJUSTMENT PROVISIONS
9.1 Adjustment of Awards and Authorized Stock. The terms of an Award
-----------------------------------------
and the number of shares of Stock authorized pursuant to Subsection 2.1 and
Section 8 for issuance under the Plan shall be subject to adjustment from time
to time, in accordance with the following provisions:
(a) If at any time, or from time to time, the Corporation shall
subdivide as a whole (by reclassification, by a Stock split, by the
issuance of a distribution on Stock payable in Stock, or otherwise) the
number of shares of Stock then outstanding into a greater number of shares
of Stock, then (i) the maximum number of shares of Stock available for the
Plan as provided in Subsection 2.1 shall be increased proportionately, and
the kind of shares or other securities available for the Plan shall be
appropriately adjusted, (ii) the number of shares of Stock (or other kind
of shares or securities) that may be acquired under any Award shall be
increased proportionately, and (iii) the price (including Exercise Price)
for each share of Stock (or other kind of shares or securities) subject to
then outstanding Awards shall be reduced proportionately, without changing
the aggregate purchase price or value as to which outstanding Awards remain
exercisable or subject to restrictions.
(b) If at any time, or from time to time, the Corporation shall
consolidate as a whole (by reclassification, reverse Stock split, or
otherwise) the number of shares of Stock then outstanding into a lesser
number of shares of Stock, then (i) the maximum number of shares of Stock
available for the Plan as provided in Subsection 2.1 shall be decreased
proportionately, and the kind of shares or other securities available for
the Plan shall be appropriately adjusted, (ii) the number of shares of
Stock (or other kind of shares or securities) that may be acquired under
any Award shall be decreased proportionately, and (iii) the price
(including Exercise Price) for each share of Stock (or other kind of shares
or securities) subject to then outstanding Awards shall be increased
proportionately, without changing the aggregate purchase price or value as
to which outstanding Awards remain exercisable or subject to restrictions.
(c) Whenever the number of shares of Stock subject to outstanding
Awards and the price for each share of Stock subject to outstanding Awards
are required to be adjusted as provided in this Subsection 9.1, the
Committee shall promptly prepare a notice setting forth, in reasonable
detail, the event requiring adjustment, the amount of the adjustment, the
method by which such adjustment was calculated, and the change in price and
the number of shares of Stock, other securities, cash, or property
purchasable
21
<PAGE>
subject to each Award after giving effect to the adjustments. The
Committee shall promptly give each Holder such a notice.
(d) Adjustments under Subsections 9(a) and (b) shall be made by the
Committee, and its determination as to what adjustments shall be made and
the extent thereof shall be final, binding, and conclusive. No fractional
interest shall be issued under the Plan on account of any such adjustments.
9.2 Changes in Control. Any Award Agreement may provide that, upon
------------------
the occurrence of a Change in Control, one or more of the following apply: (a)
each Holder of an Option shall immediately be granted corresponding Stock
Appreciation Rights; (b) all outstanding Stock Appreciation Rights and Options
shall immediately become fully vested and exercisable in full, including that
portion of any Stock Appreciation Right or Option that pursuant to the terms and
provisions of the applicable Award Agreement had not yet become exercisable (the
total number of shares of Stock as to which a Stock Appreciation Right or Option
is exercisable upon the occurrence of a change in Control is referred to herein
as the "Total Shares"); and (c) the restriction period of any Restricted Stock
Award shall immediately be accelerated and the restrictions shall expire. An
Award Agreement does not have to provide for any of the foregoing. If a Change
in Control involves a Restructuring or occurs in connection with a series of
related transactions involving a Restructuring and if such Restructuring is in
the form of a Non-Surviving Event and as a part of such Restructuring shares of
Stock, other securities, cash, or property shall be issuable or deliverable in
exchange for Stock, then the Holder of an Award shall be entitled to purchase or
receive (in lieu of the Total Shares that the Holder would otherwise be entitled
to purchase or receive), as appropriate for the form of Award, the number of
shares of Stock, other securities, cash, or property to which that number of
Total Shares would have been entitled in connection with such Restructuring
(and, for Options, at an aggregate exercise price equal to the Exercise Price
that would have been payable if that number of Total Shares had been purchased
on the exercise of the Option immediately before the consummation of the
Restructuring). Nothing in this Subsection 9.2 shall impose on a Holder the
obligation to exercise any Award immediately before or upon the Change of
Control, or cause Holder to forfeit the right to exercise the Award during the
remainder of the original term of the Award because of a Change in Control.
9.3 Restructuring Without Change in Control. In the event a
---------------------------------------
Restructuring shall occur at any time while there is any outstanding Award
hereunder and that Restructuring does not occur in connection with a Change in
Control or a series of related transactions involving a Change in Control, then:
(a) no outstanding Option or Stock Appreciation Right shall
immediately become fully vested and exercisable in full merely because of
the occurrence of the Restructuring;
(b) no Holder of an Option shall automatically be granted
corresponding Stock Appreciation Rights;
22
<PAGE>
(c) the restriction period of any Restricted Stock Award shall not
immediately be accelerated and the restrictions expire merely because of
the occurrence of the Restructuring; and
(d) at the option of the Committee, the Committee may (but shall not
be required to) cause the Corporation to take any one or more of the
following actions:
(i) accelerate in whole or in part the time of the vesting and
exercisability of any one or more of the outstanding Stock
Appreciation Rights and Options so as to provide that those Stock
Appreciation Rights and Options shall be exercisable before, upon, or
after the consummation of the Restructuring;
(ii) grant each Holder of an Option corresponding Stock
Appreciation Rights;
(iii) accelerate in whole or in part the expiration of some
or all of the restrictions on any Restricted Stock Award;
(iv) if the Restructuring is in the form of a Non-Surviving
Event, cause the surviving entity to assume in whole or in part any
one or more of the outstanding Awards upon such terms and provisions
as the Committee deems desirable; or
(v) redeem in whole or in part any one or more of the
outstanding Awards (whether or not then exercisable) in consideration
of a cash payment, as such payment may be reduced for tax withholding
obligations as contemplated in Subsections 5.9, 6.6, or 7.4, as
applicable, in an amount equal to:
(A) for Options and Stock Appreciation Rights granted in
connection with Options, the excess of (1) the Fair Market Value,
determined as of the date immediately preceding the consummation
of the Restructuring, of the aggregate number of shares of Stock
subject to the Award and as to which the Award is being redeemed
over (2) the Exercise Price for that number of shares of Stock;
(B) for Stock Appreciation Rights not granted in connection
with an Option, the excess of (1) the Fair Market Value,
determined as of the date immediately preceding the consummation
of the Restructuring, of the aggregate number of shares of Stock
subject to the Award and as to which the Award is being redeemed
over (2) the Fair Market Value of that number of shares of Stock
on the Date of Grant; and
(C) for Restricted Stock Awards, the Fair Market Value,
determined as of the date immediately preceding the consummation
of the
23
<PAGE>
Restructuring, of the aggregate number of shares of Stock subject
to the Award and as to which the Award is being redeemed.
The Corporation shall promptly notify each Holder of any election or action
taken by the Corporation under this Subsection 9.3. In the event of any
election or action taken by the Corporation pursuant to this Subsection 9.3 that
requires the amendment or cancellation of any Award Agreement as may be
specified in any notice to the Holder thereof, that Holder shall promptly
deliver that Award Agreement to the Corporation in order for that amendment or
cancellation to be implemented by the Corporation and the Committee. The
failure of the Holder to deliver any such Award Agreement to the Corporation as
provided in the preceding sentence shall not in any manner affect the validity
or enforceability of any action taken by the Corporation and the Committee under
this Subsection 9.3, including without limitation any redemption of an Award as
of the consummation of a Restructuring. Any cash payment to be made by the
Corporation pursuant to this Subsection 9.3 in connection with the redemption of
any outstanding Awards shall be paid to the Holder thereof currently with the
delivery to the Corporation of the Award Agreement evidencing that Award;
provided, however, that any such redemption shall be effective upon the
- -------- -------
consummation of the Restructuring notwithstanding that the payment of the
redemption price may occur subsequent to the consummation. If all or any
portion of an outstanding Award is to be exercised or accelerated upon or after
the consummation of a Restructuring that does not occur in connection with a
Change in Control and is in the form of a Non-Surviving Event, and as a part of
that Restructuring shares of stock, other securities, cash, or property shall be
issuable or deliverable in exchange for Stock, then the Holder of the Award
shall thereafter be entitled to purchase or receive (in lieu of the number of
shares of Stock that the Holder would otherwise be entitled to purchase or
receive) the number of shares of Stock, other securities, cash, or property to
which such number of shares of Stock would have been entitled in connection with
the Restructuring (and, for Options, upon payment of the aggregate exercise
price equal to the Exercise Price that would have been payable if that number of
Total Shares had been purchased on the exercise of the Option immediately before
the consummation of the Restructuring) and such Award shall be subject to
adjustments that shall be as nearly equivalent as may be practical to the
adjustments provided for in this Section 9.
9.4 Notice of Restructuring. The Corporation shall attempt to keep
-----------------------
all Holders informed with respect to any Restructuring or of any potential
Restructuring to the same extent that the Corporation's stockholders are
informed by the Corporation of any such event or potential event.
SECTION 10. ADDITIONAL PROVISIONS
10.1 Termination of Employment. If a Holder is an Eligible Individual
-------------------------
because the Holder is an Employee and if that employment relationship is
terminated for any reason other than (a) that Holder's death or (b) that
Holder's Disability (hereafter defined), then any and all Awards held by such
Holder in such Holder's capacity as an Employee as of the date of the
termination that are not yet exercisable (or for which restrictions have not
lapsed) shall become null and void as of the date of such termination; provided,
--------
however, that the portion, if any, of
- -------
24
<PAGE>
such Awards that are exercisable as of the date of termination shall be
exercisable for a period of the lesser of (a) the remainder of the term of the
Award or (b) the date which is 30 days after the date of termination. Any
portion of an Award not exercised upon the expiration of the lesser of the
period specified above shall be null and void unless the Holder dies during such
period, in which case the provisions of Subsection 10.3 shall govern.
10.2 Other Loss of Eligibility - Non Employees. If a Holder is an
-----------------------------------------
Eligible Individual because the Holder is serving in a capacity other than as an
Employee and if that capacity is terminated for any reason other than the
Holder's death or Disability, then that portion, if any, of any and all Awards
held by the Holder that were granted because of that capacity which are not yet
exercisable (or for which restrictions have not lapsed) as of the date of the
termination shall become null and void as of the date of the termination;
provided, however, that the portion, if any, of any and all Awards held by the
- -------- -------
Holder that are then exercisable as of the date of the termination shall be
exercisable for a period of the lesser of (a) the remainder of the term of the
Award or (b) 30 days following the date such capacity is terminated. If a
Holder is an Eligible Individual because the Holder is serving in a capacity
other than as an Employee and if that capacity is terminated by reason of the
Holder's death or Disability, then the portion, if any, of any and all Awards
held by the Holder that are not yet exercisable (or for which restrictions have
not lapsed) as of the date of that termination for death or Disability shall
become exercisable (and the restrictions thereon, if any, shall lapse) and all
such Awards held by that Holder as of the date of termination that are
exercisable (either as a result of this sentence or otherwise) shall be
exercisable for a period of the lesser of (a) the remainder of the term of the
Award or (b) the date which is 30 days after the date of termination. Any
portion of an Award not exercised upon the expiration of the periods specified
in (a) or (b) of the preceding two sentences shall be null and void upon the
expiration of such period, as applicable.
10.3 Death. Upon the death of a Holder, any and all Awards held by
-----
the Holder that are not yet exercisable (or for which restrictions have not
lapsed) as of the date of the Holder's death shall become exercisable as
provided below and any restrictions shall immediately lapse as of the date of
death; provided, however, that the Awards held by the Holder as of the date of
-------- -------
death shall be exercisable by that Holder's legal representatives, heirs,
legatees, or distributees for a period of 30 days following the date of the
Holder's death. Any portion of an Award not exercised upon the expiration of
such period shall be null and void. Except as expressly provided in this
Subsection 10.3, no Award held by a Holder shall be exercisable after the death
of that Holder.
10.4 Disability. If a Holder is an Eligible Individual because the
----------
Holder is an Employee and if that employment relationship is terminated by
reason of the Holder's Disability, then the portion, if any, of any and all
Awards held by the Holder that are not yet exercisable (or for which
restrictions have not lapsed) as of the date of that termination for Disability
shall become exercisable as provided below and any restrictions shall
immediately lapse as of the date of termination; provided, however, that the
-------- -------
Awards held by the Holder as of the date of that termination shall be
exercisable by the Holder, his guardian or his legal representative for a period
of 30 days following the date of such termination. Any portion of an Award not
exercised upon the expiration of such period shall be null and void unless the
Holder dies during
25
<PAGE>
such period, in which event the provisions of Subsection 10.3 shall govern.
"Disability" shall have the meaning given it in the employment agreement of the
Holder; provided, however, that if that Holder has no employment agreement,
-------- -------
"Disability" shall mean, as determined by the Board of Directors in the sole
discretion exercised in good faith of the Board of Directors, a physical or
mental impairment of sufficient severity that either the Holder is unable to
continue performing the duties he performed before such impairment or the
Holder's condition entitles him to disability benefits under any insurance or
employee benefit plan of the Corporation or its Subsidiaries and that impairment
or condition is cited by the Corporation as the reason for termination of the
Holder's employment.
10.5 Leave of Absence. With respect to an Award, the Committee may,
----------------
in its sole discretion, determine that any Holder who is on leave of absence for
any reason will be considered to still be in the employ of the Corporation for
any or all purposes of the Plan and the Award Agreement of such Holder.
10.6 Transferability of Awards. In addition to such other terms and
-------------------------
conditions as may be included in a particular Award Agreement, an Award
requiring exercise shall be exercisable during a Holder's lifetime only by that
Holder or by that Holder's guardian or legal representative. An Award requiring
exercise shall not be transferrable other than by will or the laws of descent
and distribution.
10.7 Forfeiture and Restrictions on Transfer. Each Award Agreement
---------------------------------------
may contain or otherwise provide for conditions giving rise to the forfeiture of
the Stock acquired pursuant to an Award or otherwise and may also provide for
those restrictions on the transferability of shares of the Stock acquired
pursuant to an Award or otherwise that the Committee in its sole and absolute
discretion may deem proper or advisable. The conditions giving rise to
forfeiture may include, but need not be limited to, the requirement that the
Holder render substantial services to the Corporation or its Subsidiaries for a
specified period of time. The restrictions on transferability may include, but
need not be limited to, options and rights of first refusal in favor of the
Corporation and stockholders of the Corporation other than the Holder of such
shares of Stock who is a party to the particular Award Agreement or a subsequent
holder of the shares of Stock who is bound by that Award Agreement.
10.8 Delivery of Certificates of Stock. Subject to Subsection 10.9,
---------------------------------
the Corporation shall promptly issue and deliver a certificate representing the
number of shares of Stock as to which (a) an Option has been exercised after the
Corporation receives an Exercise Notice and upon receipt by the Corporation of
the Exercise Price and any tax withholding as may be requested, (b) a Stock
Appreciation Right has been exercised (to the extent the Committee determines to
pay such Stock Appreciation Right in shares of Stock pursuant to Subsection 6.5)
and upon receipt by the Corporation of any tax withholding as may be requested,
and (c) restrictions have lapsed with respect to a Restricted Stock Award and
upon receipt by the Corporation of any tax withholding as may be requested. The
value of the shares of Stock or cash transferable because of an Award under the
Plan shall not bear any interest owing to the passage of time, except as may be
otherwise provided in an Award Agreement. If a Holder is entitled to receive
certificates representing Stock received for more than one form of Award
26
<PAGE>
under the Plan, separate Stock certificates shall be issued with respect to
Incentive Options and Nonstatutory Options.
10.9 Conditions to Delivery of Stock. Nothing herein or in any Award
-------------------------------
granted hereunder or any Award Agreement shall require the Corporation to issue
any shares with respect to any Award if that issuance would, in the opinion of
counsel for the Corporation, constitute a violation of the Securities Act or any
similar or superseding statute or statutes, any other applicable statute or
regulation, or the rules of any applicable securities exchange or securities
association, as then in effect. At the time of any exercise of an Option or
Stock Appreciation Right, or at the time of any grant of a Restricted Stock
Award, the Corporation may, as a condition precedent to the exercise of such
Option or Stock Appreciation Right or vesting of any Restricted Stock Award,
require from the Holder of the Award (or in the event of his death, his legal
representatives, heirs, legatees, or distributees) such written representations,
if any, concerning the Holder's intentions with regard to the retention or
disposition of the shares of Stock being acquired pursuant to the Award and such
written covenants and agreements, if any, as to the manner of disposal of such
shares as, in the opinion of counsel to the Corporation, may be necessary to
ensure that any disposition by that Holder (or in the event of the Holder's
death, his legal representatives, heirs, legatees, or distributees) will not
involve a violation of the Securities Act or any similar or superseding statute
or statutes, any other applicable state or federal statute or regulation, or any
rule of any applicable securities exchange or securities association, as then in
effect.
10.10 Certain Directors and Officers. With respect to Holders who
------------------------------
are directors or officers of the Corporation or any of its Subsidiaries and who
are subject to Section 16(b) of the Exchange Act, Awards and all rights under
the Plan shall be exercisable during the Holder's lifetime only by the Holder or
the Holder's guardian or legal representative, but not for at least six months
after grant, unless (a) the Board of Directors expressly authorizes that an
Award shall be exercisable before the expiration of the six-month period or (b)
the death or disability of the Holder occurs before the expiration of the six-
month period. In addition, no such officer or director shall exercise any Stock
Appreciation Right or have shares of Stock withheld to pay tax withholding
obligations within the first six months of the term of an Award. Any election
by any such officer or director to have tax withholding obligations satisfied by
the withholding of shares of Stock shall be irrevocable and shall be
communicated to the Committee during the period beginning on the third day
following the date of release of quarterly or annual summary statements of sales
and earnings and ending on the twelfth business day following such date (the
"Window Period") or by an irrevocable election communicated to the Committee at
least six months before the date of exercise of the Award for which such
withholding is desired. Any election by such an officer or director to receive
cash in full or partial settlement of a Stock Appreciation Right, as well as any
exercise by such individual of a Stock Appreciation Right for such cash, in
either case to the extent permitted under the applicable Award Agreement or
otherwise permitted by the Committee, shall be made during the Window Period or
within any other periods that the Committee shall specify from time to time.
10.11 Securities Act Legend. Certificates for shares of Stock,
---------------------
when issued, may have the following legend, or statements of other applicable
restrictions (including, without limitation,
27
<PAGE>
restrictions required under any Federal, state or foreign law), endorsed thereon
and may not be immediately transferable:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. THE SHARES MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED,
TRANSFERRED, OR OTHERWISE DISPOSED OF UNTIL THE HOLDER HEREOF PROVIDES
EVIDENCE SATISFACTORY TO THE ISSUER (WHICH, IN THE DISCRETION OF THE
ISSUER, MAY INCLUDE AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER) THAT
SUCH OFFER, SALE, PLEDGE, TRANSFER, OR OTHER DISPOSITION WILL NOT VIOLATE
APPLICABLE FEDERAL OR STATE LAWS.
This legend shall not be required for shares of Stock issued pursuant to an
effective registration statement under the Securities Act.
10.12 Legend for Restrictions on Transfer. Each certificate
-----------------------------------
representing shares issued to a Holder pursuant to an Award granted under the
Plan shall, if such shares are subject to any transfer restriction, including a
right of first refusal, provided for under this Plan or an Award Agreement, bear
a legend that complies with applicable law with respect to the restrictions on
transferability contained in this Subsection 10.12, such as:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY IMPOSED BY THAT CERTAIN INSTRUMENT ENTITLED
"TRAVIS BOATS & MOTORS, INC. 1995 INCENTIVE PLAN" AS ADOPTED BY TRAVIS
BOATS & MOTORS, INC. (THE "CORPORATION"), AND AN AGREEMENT THEREUNDER
BETWEEN THE CORPORATION AND THE INITIAL HOLDER THEREOF DATED
________________, 199_, AND MAY NOT BE TRANSFERRED, SOLD, OR OTHERWISE
DISPOSED OF EXCEPT AS THEREIN PROVIDED. THE CORPORATION WILL FURNISH A
COPY OF SUCH INSTRUMENT AND AGREEMENT TO THE RECORD HOLDER OF THIS
CERTIFICATE WITHOUT CHARGE ON REQUEST TO THE CORPORATION AT ITS PRINCIPAL
PLACE OF BUSINESS OR REGISTERED OFFICE.
10.13 Rights as a Stockholder. A Holder shall have no right as a
-----------------------
stockholder with respect to any shares covered by his Award until a certificate
representing those shares is issued in his name. No adjustment shall be made
for dividends (ordinary or extraordinary, whether in cash or other property) or
distributions or other rights for which the record date is before the date that
certificate is issued, except as contemplated by Section 9 hereof.
Nevertheless, dividends, dividend equivalent rights and voting rights may be
extended to and made part of any Award denominated in Stock or units of Stock,
subject to such terms, conditions and restrictions as the Committee may
establish. The Committee may also establish rules and procedures for
28
<PAGE>
the crediting of interest on deferred cash payments and dividend equivalents for
deferred payment denominated in Stock or units of Stock.
10.14 Furnish Information. Each Holder shall furnish to the Corporation
-------------------
all information requested by the Corporation to enable it to comply with any
reporting or other requirement imposed upon the Corporation by or under any
applicable statute or regulation.
10.15 Obligation to Exercise. The granting of an Award hereunder
----------------------
shall impose no obligation upon the Holder to exercise the same or any part
thereof.
10.16 Adjustments to Awards. Subject to the general limitations
---------------------
set forth in Sections 5, 6, and 9, the Committee may make any adjustment in the
Exercise Price of, the number of shares subject to, or the terms of a
Nonstatutory Option or Stock Appreciation Right by canceling an outstanding
Nonstatutory Option or Stock Appreciation Right and regranting a Nonstatutory
Option or Stock Appreciation Right. Such adjustment shall be made by amending,
substituting, or regranting an outstanding Nonstatutory Option or Stock
Appreciation Right. Such amendment, substitution, or regrant may result in
terms and conditions that differ from the terms and conditions of the original
Nonstatutory Option or Stock Appreciation Right. The Committee may not,
however, impair the rights of any Holder of previously granted Nonstatutory
Options or Stock Appreciation Rights without that Holder's consent. If such
action is effected by amendment, such amendment shall be deemed effective as of
the Date of Grant of the amended Award.
10.17 Remedies. The Corporation shall be entitled to recover from
--------
a Holder reasonable attorneys' fees incurred in connection with the enforcement
of the terms and provisions of the Plan and any Award Agreement whether by an
action to enforce specific performance or for damages for its breach or
otherwise.
10.18 Information Confidential. As partial consideration for the
------------------------
granting of each Award hereunder, the Holder shall agree with the Corporation
that he will keep confidential all information and knowledge that he has
relating to the manner and amount of his participation in the Plan; provided,
--------
however, that such information may be disclosed as required by law and may be
- -------
given in confidence to the Holder's spouse, tax or financial advisors, or to a
financial institution to the extent that such information is necessary to secure
a loan. In the event any breach of this promise comes to the attention of the
Committee, it shall take into consideration that breach in determining whether
to recommend the grant of any future Award to that Holder, as a factor
mitigating against the advisability of granting any such future Award to that
Person.
10.19 Consideration. No Option or Stock Appreciation Right shall
-------------
be exercisable and no restriction on any Restricted Stock Award shall lapse with
respect to a Holder unless and until the Holder thereof shall have paid cash or
property to, or performed services for, the Corporation or any of its
Subsidiaries that the Committee believes is equal to or greater in value than
the par value of the Stock subject to such Award.
29
<PAGE>
SECTION 11. DURATION AND AMENDMENT OF PLAN
11.1 Duration. No Awards may be granted hereunder after the date that
--------
is ten years from the earlier of (a) the date the Plan is adopted by the Board
of Directors and (b) the date the Plan is approved by the stockholders of the
Corporation.
11.2 Amendment. The Board of Directors may, insofar as permitted by
---------
law, with respect to any shares which, at the time, are not subject to Awards,
suspend or discontinue the Plan or revise or amend it in any respect whatsoever
and may amend any provision of the Plan or any Award Agreement to make the Plan
or the Award Agreement, or both, comply with Section 16(b) of the Exchange Act
and the exemptions from that Section in the regulations thereunder. The Board
of Directors may also amend, modify, suspend, or terminate the Plan for the
purpose of meeting or addressing any changes in other legal requirements
applicable to the Corporation or the Plan or for any other purpose permitted by
law. The Plan may not be amended without the consent of the holders of a
majority of the shares of Stock then outstanding to (a) increase materially the
aggregate number of shares of Stock that may be issued under the Plan (except
for adjustments pursuant to Section 9 hereof), (b) increase materially the
benefits accruing to Eligible Individuals under the Plan, or (c) modify
materially the requirements about eligibility for participation in the Plan;
provided, however, that such amendments may be made without the consent of
- -------- -------
stockholders of the Corporation if changes occur in law or other legal
requirements (including Rule 16b-3) that would permit such changes. In
connection with any amendment of the Plan, the Board of Directors shall be
authorized to incorporate such provisions as shall be necessary for amounts paid
under the Plan to be exempt from Section 162(m) of the Code.
SECTION 12. GENERAL
12.1 Application of Funds. The proceeds received by the Corporation
--------------------
from the sale of shares pursuant to Awards may be used for any general corporate
purpose.
12.2 Right of the Corporation and Subsidiaries to Terminate
------------------------------------------------------
Employment. Nothing contained in the Plan, or in any Award Agreement, shall
confer upon any Holder the right to continue in the employ of the Corporation or
any Subsidiary or interfere in any way with the rights of the Corporation or any
Subsidiary to terminate the Holder's employment at any time.
12.3 No Liability for Good Faith Determinations. Neither the members
------------------------------------------
of the Board of Directors nor any member of the Committee shall be liable for
any act, omission or determination taken or made in good faith with respect to
the Plan or any Award granted under it; and members of the Board of Directors
and the Committee shall be entitled to indemnification and reimbursement by the
Corporation in respect of any claim, loss, damage, or expense (including
attorneys' fees, the costs of settling any suit, provided such settlement is
approved by independent legal counsel selected by the Corporation, and amounts
paid in satisfaction of a judgment, except a judgment based on a finding of bad
faith) arising therefrom to the full extent permitted by law and under any
directors' and officers' liability or similar insurance coverage that may from
time to time be in effect. This right to indemnification shall be in
30
<PAGE>
addition to, and not a limitation on, any other indemnification rights any
member of the Board of Directors or the Committee may have.
12.4 Other Benefits. Participation in the Plan shall not preclude the
--------------
Holder from eligibility in any other stock or stock option plan of the
Corporation or any Subsidiary or any old age benefit, insurance, pension, profit
sharing retirement, bonus, or other extra compensation plans that the
Corporation or any Subsidiary has adopted, or may, at any time, adopt for the
benefit of its Employees. Neither the adoption of the Plan by the Board of
Directors nor the submission of the Plan to the stockholders of the Corporation
for approval shall be construed as creating any limitations on the power of the
Board of Directors to adopt such other incentive arrangements as it may deem
desirable, including, without limitation, the granting of stock options and the
awarding of stock and cash otherwise than under the Plan and such arrangements
may be either generally applicable or applicable only in specific cases.
12.5 Exclusion From Pension and Profit-Sharing Compensation. By
------------------------------------------------------
acceptance of an Award (regardless of form), as applicable, each Holder shall be
deemed to have agreed that the Award is special incentive compensation that will
not be taken into account in any manner as salary, compensation, or bonus in
determining the amount of any payment under any pension, retirement, or other
employee benefit plan of the Corporation or any Subsidiary, unless any pension,
retirement, or other employee benefit plan of the Corporation or Subsidiary
expressly provides that such Award shall be so considered for purposes of
determining the amount of any payment under any such plan. In addition, each
beneficiary of a deceased Holder shall be deemed to have agreed that the Award
will not affect the amount of any life insurance coverage, if any, provided by
the Corporation or a Subsidiary on the life of the Holder that is payable to the
beneficiary under any life insurance plan covering employees of the Corporation
or any Subsidiary.
12.6 Execution of Receipts and Releases. Any payment of cash or any
----------------------------------
issuance or transfer of shares of Stock to the Holder, or to his legal
representative, heir, legatee, or distributee, in accordance with the provisions
hereof, shall, to the extent thereof, be in full satisfaction of all claims of
such persons hereunder. The Committee may require any Holder, legal
representative, heir, legatee, or distributee, as a condition precedent to such
payment, to execute a release and receipt therefor in such form as it shall
determine.
12.7 Unfunded Plan. Insofar as it provides for Awards of cash and
-------------
Stock, the Plan shall be unfunded. Although bookkeeping accounts may be
established with respect to Holders who are entitled to cash, Stock, or rights
thereto under the Plan, any such accounts shall be used merely as a bookkeeping
convenience. The Corporation shall not be required to segregate any assets that
may at any time be represented by cash, Stock, or rights thereto, nor shall the
Plan be construed as providing for such segregation, nor shall the Corporation
nor the Board of Directors nor the Committee be deemed to be a trustee of any
cash, Stock, or rights thereto to be granted under the Plan. Any liability of
the Corporation to any Holder with respect to a grant of cash, Stock, or rights
thereto under the Plan shall be based solely upon any contractual obligations
that may be created by the Plan and any Award Agreement; no such obligation of
the Corporation shall be deemed to be secured by any pledge or other encumbrance
on any
31
<PAGE>
property of the Corporation. Neither the Corporation nor the Board of Directors
nor the Committee shall be required to give any security or bond for the
performance of any obligation that may be created by the Plan.
12.8 No Guarantee of Interests. Neither the Committee nor the
-------------------------
Corporation guarantees the Stock of the Corporation from loss or depreciation.
12.9 Payment of Expenses. All expenses incident to the
-------------------
administration, termination, or protection of the Plan, including, but not
limited to, legal and accounting fees, shall be paid by the Corporation or its
Subsidiaries; provided, however, the Corporation or a Subsidiary may recover any
-------- -------
and all damages, fees, expenses, and costs arising out of any actions taken by
the Corporation to enforce its right to purchase Stock under this Plan.
12.10 Corporation Records. Records of the Corporation or its
-------------------
Subsidiaries regarding the Holder's period of employment, termination of
employment and the reason therefor, leaves of absence, re-employment, and other
matters shall be conclusive for all purposes hereunder, unless determined by the
Committee to be incorrect.
12.11 Information. The Corporation and its Subsidiaries shall,
-----------
upon request or as may be specifically required hereunder, furnish or cause to
be furnished all of the information or documentation which is necessary or
required by the Committee to perform its duties and functions under the Plan.
12.12 No Liability of Corporation. The Corporation assumes no
---------------------------
obligation or responsibility to the Holder or his legal representatives, heirs,
legatees, or distributees for any act of, or failure to act on the part of, the
Committee.
12.13 Corporation Action. Any action required of the Corporation
------------------
shall be by resolution of its Board of Directors or by a person authorized to
act by resolution of the Board of Directors.
12.14 Severability. In the event that any provision of this Plan,
------------
or the application hereof to any Person or circumstance, is held by a court of
competent jurisdiction to be invalid, illegal, or unenforceable in any respect
under present or future laws effective during the effective term of any such
provision, such invalid, illegal, or unenforceable provision shall be fully
severable; and this Plan shall then be construed and enforced as if such
invalid, illegal, or unenforceable provision had not been contained in this
Plan; and the remaining provisions of this Plan shall remain in full force and
effect and shall not be affected by the illegal, invalid, or unenforceable
provision or by its severance from this Plan. Furthermore, in lieu of each such
illegal, invalid, or unenforceable provision, there shall be added automatically
as part of this Plan a provision as similar in terms to such illegal, invalid,
or unenforceable provision as may be possible and be legal, valid, and
enforceable. If any of the terms or provisions of this Plan conflict with the
requirements of Rule 16b-3 (as those terms or provisions are applied to Eligible
Individuals who are subject to Section 16(b) of the Exchange Act), then those
conflicting terms or provisions shall be deemed inoperative to the extent they
so conflict with the requirements of Rule 16b-3
32
<PAGE>
and, in lieu of such conflicting provision, there shall be added automatically
as part of this Plan a provision as similar in terms to such conflicting
provision as may be possible and not conflict with the requirements of Rule 16b-
3. If any of the terms or provisions of this Plan conflict with the
requirements of Section 422 of the Code (with respect to Incentive Options),
then those conflicting terms or provisions shall be deemed inoperative to the
extent they so conflict with the requirements of Section 422 of the Code and, in
lieu of such conflicting provision, there shall be added automatically as part
of this Plan a provision as similar in terms to such conflicting provision as
may be possible and not conflict with the requirements of Section 422 of the
Code. With respect to Incentive Options, if this Plan does not contain any
provision required to be included herein under Section 422 of the Code, that
provision shall be deemed to be incorporated herein with the same force and
effect as if that provision had been set out at length herein; provided,
--------
however, that, to the extent any Option that is intended to qualify as an
- -------
Incentive Option cannot so qualify, that Option (to that extent) shall be deemed
a Nonstatutory Option for all purposes of the Plan.
12.15 Notices. Whenever any notice is required or permitted
-------
hereunder, such notice must be in writing and personally delivered or sent by
mail. Any notice required or permitted to be delivered hereunder shall be
deemed to be delivered on the date on which it is actually received by the
Corporation addressed to the attention of the Corporate Secretary at the
Corporation's office as specified in the applicable Award Agreement. The
Corporation or a Holder may change, at any time and from time to time, by
written notice to the other, the address which it or he had previously specified
for receiving notices. Until changed in accordance herewith, the Corporation
and each Holder shall specify as its and his address for receiving notices the
address set forth in the Award Agreement pertaining to the shares to which such
notice relates. Any person entitled to notice hereunder may waive such notice.
12.16 Successors. The Plan shall be binding upon the Holder, his
----------
legal representatives, heirs, legatees, and distributees, upon the Corporation,
its successors and assigns and upon the Committee and its successors.
12.17 Headings. The titles and headings of Sections and Subsections are
--------
included for convenience of reference only and are not to be considered in
construction of the provisions hereof.
12.18 Governing Law. All questions arising with respect to the
-------------
provisions of the Plan shall be determined by application of the laws of the
State of Texas without giving effect to any conflict of law provisions thereof,
except to the extent Texas law is preempted by federal law. Questions arising
with respect to the provisions of an Award Agreement that are matters of
contract law shall be governed by the laws of the state specified in the Award
Agreement, except to the extent that Texas corporate law subconflicts with the
contract law of such state, in which event Texas law shall govern irrespective
of any conflict of law laws. The obligation of the Corporation to sell and
deliver Stock hereunder is subject to applicable federal, state and foreign laws
and to the approval of any governmental authority required in connection with
the authorization, issuance, sale, or delivery of such Stock.
33
<PAGE>
12.19 Word Usage. Words used in the masculine shall apply to the
----------
feminine where applicable, and wherever the context of this Plan dictates, the
plural shall be read as the singular and the singular as the plural.
IN WITNESS WHEREOF, Travis Boats, acting by and through its duly authorized
officer, has executed this instrument this 14th day of December, 1995.
TRAVIS BOATS & MOTORS, INC.,
a Texas corporation
By: /s/ Mark T. Walton
-------------------------------------------
Name: Mark T. Walton
Title: President
34
<PAGE>
EXHIBIT 10.23
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (the "Agreement") dated as of
_______________, 199___, is by and between Travis Boats & Motors, Inc., a Texas
corporation (the "Company"), and __________________ ("Indemnitee").
RECITALS
--------
A. Indemnitee an officer of the Company and in such capacity is performing
a valuable service to the Company.
B. The Company's bylaws (the "Bylaws") provide for the indemnification of
the directors, officers, employees and agents of the Company to the extent set
forth in the Articles of Incorporation, as amended of the Company (the
"Articles").
C. The Articles provide that the Company shall indemnify the directors,
officers, employees and agents of the Company to the fullest extent permitted by
the Texas Business Corporation Act, as amended to date (the "Act").
D. The Act specifically provides that indemnification and advancement of
expenses provided in such statute shall not be exclusive of any other rights
under any agreement, and thereby contemplates that agreements may be entered
into between the Company and members of the board of directors and officers of
the Company with respect to the indemnification of such directors and officers.
E. The general availability of directors' and officers' liability
insurance ("Insurance") covering certain liabilities which may be incurred by
the Company's directors and officers in the performance of their services to the
Company and the applicability, amendment and enforcement of statutory and bylaw
provisions have raised questions concerning the adequacy and reliability of the
protection afforded to directors and officers.
F. In order to induce Indemnitee to serve as a member of the board of
directors and/or an officer of the Company for the current term and for any
subsequent term to which he or she is elected by the shareholders or appointed
by the Board of Directors, the Company has deemed it to be in its best interest
to enter into this Agreement with Indemnitee.
The parties agree as follows:
1. Definitions. As used in this Agreement, the following terms shall have
-----------
the following meanings:
(a) Change in Control. A "Change in Control" shall be deemed to have
-----------------
occurred if (i) any "person" (as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended) is or becomes the
"beneficial owner" (as such term is
<PAGE>
defined in Rule 13d-3 under the Act), directly or indirectly, of securities of
the Company representing 25% or more of the combined voting power of the
outstanding securities of the Company (other than (A) a person owning 25% or
more as of the date of this Agreement, (B) a person who becomes the owner of 25%
or more by reason of the Company's acquisition of outstanding shares of the
Company's stock, or (C) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company), or (ii) during any period of two
consecutive years, individuals who at the beginning of such period constitute
the board of directors of the Company and any new director whose election by the
board of directors or nomination for election by the Company's shareholders was
approved by a vote of at least two-thirds (2/3) of the directors then still in
office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease for any
reason to constitute a majority thereof, or (iii) the shareholders of the
Company approve (x) a merger or consolidation of the Company with any other
entity (other than a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least 80% of the combined voting power of
the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation), (y) a plan of complete
liquidation of the Company or (z) an agreement or agreements for the sale or
disposition, in a single transaction or series of related transactions, by the
Company of all or substantially all of the property and assets of the Company.
Notwithstanding the foregoing, events otherwise constituting a Change in Control
in accordance with the foregoing shall not constitute a Change in Control if
such events are solicited by the Company and are approved, recommended or
supported by the board of directors of the Company in actions taken prior to,
and with respect to, such events.
(b) Reviewing Party. A "Reviewing Party" means (i) the board of directors
---------------
or a committee of directors of the Company, who are not officers, appointed by
the board of directors, provided that a majority of such directors are not
parties to the claim or (ii) special, independent counsel selected and appointed
by the board of directors or by a committee of directors of the Company who are
not officers.
2. Indemnification of Indemnitee. The Company hereby agrees that it shall
-----------------------------
hold harmless and indemnify Indemnitee to the fullest extent authorized and
permitted by (i) the provisions of the Articles and Bylaws and the provisions of
the Act, or by any amendment thereof, but in the case of any such amendment,
only to the extent that such amendment permits the Company to provide broader
indemnification rights than the Articles, Bylaws or Act permitted the Company to
provide prior to such amendment or (ii) other statutory provisions authorizing
or permitting such indemnification which are adopted after the date hereof.
3. Insurance.
---------
(a) Insurance Policies. So long as Indemnitee may be subject to any
------------------
possible claim or threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that Indemnitee is or was an officer, to the extent that the Company maintains
one or more insurance policy or policies providing directors'
2
<PAGE>
and officers' liability insurance, Indemnitee shall be covered by such policy or
policies in accordance with its or their terms, to the maximum extent of the
coverage applicable to any director or officer then serving the Company.
(b) Maintenance of Insurance. The Company shall not be required to
------------------------
maintain the Insurance or any policy or policies of comparable insurance, as the
case may be, if such insurance is not reasonably available or if, in the
reasonable business judgment of the board of directors of the Company which
shall be conclusively established by such determination by the board of
directors, or any appropriate committee thereof, either (i) the premium cost for
such insurance is substantially disproportionate to the amount of coverage
thereunder or (ii) the coverage provided by such insurance is so limited by
exclusions that there is insufficient benefit from such insurance.
4. Additional Indemnification. Subject only to the exclusions set forth
--------------------------
in Section 5 hereof, the Company hereby agrees that it shall hold harmless and
indemnify Indemnitee:
(a) against any and all expenses, including attorneys' fees, judgments,
fines and amounts paid in settlement actually and reasonably incurred by
Indemnitee in connection with any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or investigative,
including an action by or on behalf of shareholders of the Company or by or in
the right of the Company, to which Indemnitee is, was or at any time becomes a
party, or is threatened to be made a party, by reason of the fact that
Indemnitee is, was or at any time becomes a director, officer, employee or agent
of the Company, or is or was serving or at any time serves at the request of the
Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise; and
(b) otherwise to the fullest extent as may be provided to Indemnitee by the
Company under the Act.
5. Limitations on Additional Indemnification. No indemnification pursuant
-----------------------------------------
to this Agreement shall be paid by the Company:
(a) in respect to any transaction if it shall be determined by the
Reviewing Party, or by final judgment or other final adjudication, that
Indemnitee derived an improper personal benefit;
(b) in respect to the return by Indemnitee of any remuneration paid to
Indemnitee if it shall be determined by the Reviewing Party, or by final
judgment or other final adjudication, that such remuneration was not approved by
the shareholders of the Company and was thereby in violation of law;
(c) on account of Indemnitee's conduct which is determined by the Reviewing
Party, or by final judgment or other final adjudication, to have involved acts
or omissions not in good faith, intentional misconduct or a knowing violation of
law;
3
<PAGE>
(d) if the Reviewing Party or a court having jurisdiction in the matter
shall determine that such indemnification is in violation of the Articles, the
Bylaws or the law.
6. Advancement of Expenses. In the event of any threatened or pending
-----------------------
action, suit or proceeding in which Indemnitee is a party or is involved and
which may give rise to a right of indemnification under this Agreement,
following written request to the Company by Indemnitee, the Company shall
promptly pay to Indemnitee amounts to cover expenses incurred by Indemnitee in
such proceeding in advance of its final disposition upon the receipt by the
Company of (i) a written undertaking executed by or on behalf of Indemnitee to
repay the advance if it shall ultimately be determined that Indemnitee is not
entitled to be indemnified by the Company as provided in this Agreement and (ii)
satisfactory evidence as to the amount of such expenses.
7. Repayment of Expenses. Indemnitee agrees that Indemnitee shall
---------------------
reimburse the Company for all reasonable expenses paid by the Company in
defending any civil, criminal, administrative or investigative action, suit or
proceeding against Indemnitee in the event and only to the extent that it shall
be determined by final judgment or other final adjudication that Indemnitee is
not entitled to be indemnified by the Company for such expenses under the
provisions of the Act or any applicable law.
8. Determination of Indemnification; Burden of Proof. With respect to all
-------------------------------------------------
matters concerning the rights of Indemnitee to indemnification and payment of
expenses under this Agreement or under the provisions of the Articles and Bylaws
now or hereafter in effect, the Company shall appoint a Reviewing Party and any
determination by the Reviewing Party shall be conclusive and binding on the
Company and Indemnitee. If under applicable law the entitlement of Indemnitee
to be indemnified under this Agreement depends on whether a standard of conduct
has been met, the burden of proof of establishing that Indemnitee did not act in
accordance with such standard of conduct shall rest with the Company.
Indemnitee shall be presumed to have acted in accordance with such standard and
entitled to indemnification or advancement of expenses hereunder, as the case
may be, unless, based upon a preponderance of the evidence, it shall be
determined by the Reviewing Party that Indemnitee did not meet such standard.
For purposes of this Agreement, unless otherwise expressly stated herein, the
termination of any action, suit or proceeding by judgment, order, settlement,
whether with or without court approval, or conviction, or upon a plea of nolo
contendere or its equivalent shall not create a presumption that Indemnitee did
not meet any particular standard of conduct or have any particular belief or
that a court has determined that indemnification is not permitted by applicable
law.
9. Effect of Change in Control. If there has not been a Change in Control
---------------------------
after the date of this Agreement, the determination of (i) the rights of
Indemnitee to indemnification and payment of expenses under this Agreement or
under the provisions of the Articles and the Bylaws, (ii) standard of conduct
and (iii) evaluation of the reasonableness of amounts claimed by Indemnitee
shall be made by the Reviewing Party or such other body or persons as may be
permitted by the Act. If there has been a Change in Control after the date of
this Agreement, such determination and evaluation shall be made by a special,
independent counsel who is
4
<PAGE>
selected by Indemnitee and approved by the Company, which approval shall not be
unreasonably withheld, and who has not otherwise performed services for
Indemnitee or the Company.
10. Continuation of Indemnification. All agreements and obligations of
-------------------------------
the Company contained herein shall continue during the period that Indemnitee is
a director, officer, employee or agent of the Company, or is or was serving at
the request of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise at the
request of the Company, and shall continue thereafter so long as Indemnitee
shall be subject to any possible claim or threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that Indemnitee was an officer of the
Company or serving in any other capacity referred to herein.
11. Notification and Defense of Claim. Promptly after receipt by
---------------------------------
Indemnitee of notice of the commencement of any action, suit or proceeding,
Indemnitee shall, if a claim in respect hereof is to be made against the Company
under this Agreement, notify the Company of the commencement thereof; provided,
however, that delay in so notifying the Company shall not constitute a waiver or
release by Indemnitee of rights hereunder and that omission by Indemnitee to so
notify the Company shall not relieve the Company from any liability which it may
have to Indemnitee otherwise than under this Agreement. With respect to any
such action, suit or proceeding as to which Indemnitee notifies the Company of
the commencement thereof:
(a) The Company shall be entitled to participate therein at its own
expense; and
(b) Except as otherwise provided below, to the extent that it may wish, the
Company, jointly with any other indemnifying party similarly notified, shall be
entitled to assume the defense thereof and to employ counsel reasonably
satisfactory to Indemnitee. After notice from the Company to Indemnitee of its
election to so assume the defense thereof, the Company shall not be liable to
Indemnitee under this Agreement for any legal or other expenses subsequently
incurred by Indemnitee in connection with the defense thereof other than
reasonable costs of investigation or as otherwise provided below. Indemnitee
shall have the right to employ counsel of his own choosing in such action, suit
or proceeding but the fees and expenses of such counsel incurred after notice
from the Company of assumption by the Company of the defense thereof shall be at
the expense of Indemnitee unless (i) the employment of counsel by Indemnitee has
been specifically authorized by the Company, such authorization to be
conclusively established by action by disinterested members of the board of
directors though less than a quorum; (ii) representation by the same counsel of
both Indemnitee and the Company would, in the reasonable judgment of Indemnitee
and the Company, be inappropriate due to an actual or potential conflict of
interest between the Company and Indemnitee in the conduct of the defense of
such action, such conflict of interest to be conclusively established by an
opinion of counsel to the Company to such effect; (iii) the counsel employed by
the Company and reasonably satisfactory to Indemnitee has advised Indemnitee in
writing that such counsel's representation of Indemnitee would likely involve
such counsel in representing differing interests which could adversely affect
the judgment or loyalty of such counsel to Indemnitee, whether it be a
conflicting, inconsistent, diverse or other interest; or (iv) the Company shall
not in fact
5
<PAGE>
have employed counsel to assume the defense of such action, in each of which
cases the fees and expenses of counsel shall be paid by the Company. The
Company shall not be entitled to assume the defense of any action, suit or
proceeding brought by or on behalf of the Company or as to which a conflict of
interest has been established as provided in (ii) hereof. Notwithstanding the
foregoing, if an insurance company has supplied directors' and officers'
liability insurance covering an action, suit or proceeding, then such insurance
company shall employ counsel to conduct the defense of such action, suit or
proceeding unless Indemnitee and the Company reasonably concur in writing that
such counsel is unacceptable.
(c) The Company shall not be liable to indemnify Indemnitee under this
Agreement for any amounts paid in settlement of any action or claim effected
without its written consent. The Company shall not settle any action or claim
in any manner which would impose any liability or penalty on Indemnitee without
Indemnitee's written consent. Neither the Company nor Indemnitee shall
unreasonably withhold consent to any proposed settlement.
12. Enforcement.
-----------
(a) The Company expressly confirms and agrees that it entered into this
Agreement and assumed the obligations imposed on the Company hereby in order to
induce Indemnitee to serve as an officer of the Company and acknowledges that
Indemnitee is relying upon this Agreement in continuing in such capacity.
(b) If a claim for indemnification or advancement of expenses is not paid
in full by the Company within 30 days after a written claim by Indemnitee has
been received by the Company, Indemnitee may at any time assert the claim and
bring suit against the Company to recover the unpaid amount of the claim. In
the event Indemnitee is required to bring any action to enforce rights or to
collect moneys due under this Agreement and is successful in such action, the
Company shall reimburse Indemnitee for all of Indemnitee's reasonable attorneys'
fees and expenses in bringing and pursuing such action.
13. Proceedings by Indemnitee. The Company shall not be liable to make
-------------------------
any payment under this Agreement in connection with any action, suit or
proceeding, or any part thereof, initiated by Indemnitee unless such action,
suit or proceeding, or part thereof, was authorized by the Company, such
authorization to be conclusively established by action by disinterested members
of the board of directors though less than a quorum.
14. Effectiveness. This Agreement is effective for, and shall apply to
-------------
(i) any claim which is asserted or threatened before, on or after the date of
this Agreement but for which no action, suit or proceeding has been brought
prior to the date hereof, and (ii) any action, suit or proceeding which is
threatened before, on or after the date of this Agreement but which is not
pending prior to the date hereof. This Agreement shall not apply to any action,
suit or proceeding which was brought before the date of this Agreement. So long
as the foregoing is satisfied, this Agreement shall be effective for, and be
applicable to, acts or omissions occurring prior to, on or after the date
hereof.
6
<PAGE>
15. Non-exclusivity. The rights of Indemnitee under this Agreement shall
---------------
not be deemed exclusive, or in limitation of, any rights to which Indemnitee may
be entitled under any applicable common or statutory law, or pursuant to the
Articles, the Bylaws, vote of shareholders or otherwise.
16. Other Payments. The Company shall not be liable to make any payment
--------------
under this Agreement in connection with any action, suit or proceeding against
Indemnitee to the extent Indemnitee has otherwise received payment of the
amounts otherwise payable by the Company hereunder.
17. Subrogation. In the event the Company makes any payment under this
-----------
Agreement, the Company shall be subrogated, to the extent of such payment, to
all rights of recovery of Indemnitee with respect thereto, and Indemnitee shall
execute all agreements, instruments, certificates or other documents and do or
cause to be done all things necessary or appropriate to secure such recovery
rights to the Company including, without limitation, executing such documents as
shall enable the Company to bring an action or suit to enforce such recovery
rights.
18. Survival; Continuation. The rights of Indemnitee under this Agreement
----------------------
shall inure to the benefit of Indemnitee, his heirs, executors, administrators,
personal representatives and assigns, and this Agreement shall be binding upon
the Company, its successors and assigns. The rights of Indemnitee under this
Agreement shall continue so long as Indemnitee may be subject to any action,
suit or proceeding because of the fact that Indemnitee is or was a director,
officer, employee or agent of the Company or is or was serving at the request of
the Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise. If the Company, in a
single transaction or series of related transactions, sells, leases, exchanges,
or otherwise disposes of all or substantially all of its property and assets,
the Company shall, as a condition precedent to any such transaction, cause
effective provision to be made so that the persons or entities acquiring such
property and assets shall become bound by and replace the Company under this
Agreement.
19. Amendment and Termination. No amendment, modification, termination or
-------------------------
cancellation of this Agreement shall be effective unless made in writing signed
by both parties hereto.
20. Headings. Section headings of the sections and paragraphs of this
--------
Agreement have been inserted for convenience of reference only and do not
constitute a part of this Agreement.
21. Notices. All notices, demands or other communications to be given or
-------
delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when delivered personally or by
telex, facsimile transmission, telegram or overnight delivery service, or 72
hours after having been mailed by certified or registered mail, return receipt
requested, and postage prepaid, to the recipient. Such notices, demands and
other communications will be sent to each party at the address indicated below:
7
<PAGE>
(a) if to the Company:
13045 Research Boulevard
Austin, Texas 78750
Attn: Mark T. Walton
with a copy to:
Jenkens & Gilchrist,
A Professional Corporation
2200 One American Center
600 Congress Avenue
Austin, Texas 78701
Attn: Rowland Cook
(b) if to the Indemnitee:
________________________________
________________________________
________________________________
________________________________
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
22. Severability. If any provision of this Agreement shall be held to be
------------
illegal, invalid or unenforceable under any applicable law, then such
contravention or invalidity shall not invalidate the entire Agreement. Such
provision shall be deemed to be modified to the extent necessary to render it
legal, valid and enforceable, and if no such modification shall render it legal,
valid and enforceable, then this Agreement shall be construed as if not
containing the provision held to be invalid, and the rights and obligations of
the parties shall be construed and enforced accordingly.
23. Complete Agreement. This Agreement, those documents expressly
------------------
referred to herein, and other documents of even date herewith embody the
complete agreement and understanding among the parties and supersede and preempt
any prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
24. Counterparts. This Agreement may be executed in any number of
------------
counterparts and by different parties hereto in separate counterparts, with the
same effect as if all parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together and shall
constitute one and the same instrument.
8
<PAGE>
25. Choice of Law. This Agreement will be governed by the internal law,
-------------
and not the law of conflicts, of the State of Texas.
IN WITNESS WHEREOF, the parties hereto have caused this Indemnification
Agreement to be executed on the day and year first above written.
TRAVIS BOATS & MOTORS, INC.
By:________________________________________
Name: Mark T. Walton
Title: President
INDEMNITEE
__________________________________________
__________________________
9
<PAGE>
EXHIBIT 10.24
MANAGEMENT AGREEMENT
--------------------
THIS MANAGEMENT AGREEMENT (the "Agreement") is made and entered into as of
December 14, 1995 (the "Effective Date") by and among TBC Management, Ltd., a
Texas limited partnership (the "Management Company"), on the one hand, and
Travis Boats & Motors, Inc., a Texas corporation ("Travis Austin"), and its
wholly-owned subsidiaries listed on the signature page to this Agreement (the
"Subsidiaries") (collectively, Travis Austin and the Companies are referred to
herein as the "Companies" or individually as a "Company").
Recitals:
--------
WHEREAS, Travis Austin and the Subsidiaries own and operate retail boating
centers in various locations throughout Texas, Louisiana and Arkansas; and
WHEREAS, the Companies desire to engage the Management Company to provide
management services to the Companies on the terms and conditions set forth
herein.
Agreements:
----------
Now, therefore, for the consideration set forth herein, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
Section 1. Engagement. The Companies hereby engage the Management Company
----------
to perform the services described below (the "Services") for the Companies, and
the Management Company hereby accepts such engagement, subject to and upon the
terms and conditions set forth herein. The Management Company shall:
a. provide to each Company a trained and qualified manager to manage the
day-to-day operations of each store operated by each Company.
b. provide to each Company an individual to serve as Chief Executive
Officer and President. Such individual shall be the same person for each
Company and shall oversee and manage the operations of each Company on an
individual basis and the Companies as a whole.
c. provide to each Company an individual to serve as Chief Financial
Officer. Such individual shall be the same person for each Company and shall
oversee and manage the operations of each Company on an individual basis and the
Companies as a whole.
d. provide all accounting functions for the Companies, including financial
accounting, various federal, state and local tax compliance and other necessary
services.
e. provide marketing research and design and implement advertising and
promotional activities for the Companies.
<PAGE>
f. research the marketability of various product lines, negotiate group
purchasing and discounts for the Companies with manufacturers and purchase
products for the Companies.
g. negotiate with lenders to provide financing for the Companies.
h. investigate and analyze potential acquisition targets, perform site
selection for new stores and perform related services in connection with the
acquisition strategy of the Companies.
i. hire employees for the Companies and perform all human resources and
personnel related duties.
j. perform such other services as are reasonable and necessary to carry
out and perform the terms of this Agreement.
Section 2. Management Standards. The Management Company shall use
--------------------
reasonable commercial efforts in connection with the performance of the Services
for the Companies and the supervision of any persons or entities employed in
connection therewith. In performing its obligations hereunder, the Management
Company shall be held to that standard of care as would be exercised by an
ordinarily prudent corporation performing the Services, acting on its own behalf
and under similar circumstances.
Section 3. Term. The term of this Agreement shall commence upon the date
----
hereof, and shall continue in effect until terminated by the parties, unless
terminated earlier as provided in Section 9 hereof.
Section 4. Authority of the Management Company. The Management Company
-----------------------------------
shall provide the Services for the account and on behalf of the Companies, and
shall have the power and authority with respect to the Services during the term
of this Agreement as the Management Company, in its discretion, deems reasonably
necessary or appropriate in order to effectively perform the Services. All
major purchases, financing arrangements, change in product lines, marketing
strategies, acquisitions, and similar events shall be approved in advance by the
boards of directors of each of the Companies.
Section 5. Systems Operating Accounts. The Management Company shall
--------------------------
establish and maintain with one or more banks reasonably acceptable to the
Companies one or more checking accounts ("Operating Accounts"), for the deposit
of all funds collected by the Companies. The Management Company shall have the
right and authority to make deposits to and withdrawals from the Operating
Accounts and to make payment therefrom for the discharge of the Management
Company's responsibilities and duties under this Agreement and to make payment
to the Management Company of its fees earned under this Agreement. The
Management Company may disburse or have disbursed from the Operating Accounts
the regular recurring operating expenses of the Companies, as well as
extraordinary expenses, including by way of illustration and not in limitation
(i) salaries, withholding taxes, expenses and taxes relating to employees of the
Companies, (ii) expenses (including fees charged by professionals) incurred in
connection with the performance of the Services, and (iii) costs of all
materials, equipment,
2
<PAGE>
supplies and services necessary for proper performance of the Services.
Section 6. Management Fee. In consideration of the Services to be
--------------
provided to the Companies by the Management Company pursuant to this Agreement,
each Company shall pay to the Management Company a management fee (the
"Management Fee") as set forth below within 30 days after the end of each month
during the term of this Agreement:
<TABLE>
<CAPTION>
Name of Company 1995 Monthly Management Fee
--------------- ---------------------------
<S> <C>
Travis Austin $180,000
Falcon Marine, Inc. $ 30,000
Falcon Marine Abilene, Inc. $ 30,000
TBC Arkansas, Inc. $ 90,000
Travis Boats & Motors
Baton Rouge, Inc. $ 30,000
Travis Boating Center
Arlington, Inc. $ 30,000
Travis Boating Center
Beaumont, Inc. $ 60,000
Travis Boating Center
Louisiana, Inc. $ 30,000
Travis Snowden Marine, Inc. $ 60,000
</TABLE>
The Management Company and the Companies may renegotiate, on a monthly
basis, the Management Fee. Any changes in the Management must be agreed to in
writing by the Management Company and the Company affected by the change.
Section 7. Indemnification by the Management Company. The Management
-----------------------------------------
Company shall indemnify the Companies and its successors, assigns and agents
from any and all claims, threatened claims, damages, liabilities, costs and
expenses (including reasonable attorneys' fees and court costs) incurred by
reason of the performance of the Management Company's duties hereunder, to the
extent that such claims, threatened claims, damages, liabilities, costs and
expenses are due to the fraud, gross negligence, willful misconduct of, or
violation of this Agreement by, the Management Company, provided that such
indemnification shall extend only to actual or threatened claims, damages,
liabilities, costs and expenses.
3
<PAGE>
Section 8. Indemnification by the Companies. The Companies shall
--------------------------------
indemnify the Management Company, its officers, directors, employees and control
persons (individually, an "Indemnified Person") and hold them harmless from any
and all claims, threatened claims, damages, liabilities, costs and expenses
(including reasonable attorneys', accountants' and other experts' fees and court
costs) which they may incur by reason of the performance of the Management
Company's duties hereunder if the Indemnified Person acted in good faith and in
a manner it reasonably believed to be in the best interests of the Companies,
and with respect to any criminal proceeding, had no reasonable cause to believe
its conduct was unlawful, except where such claims, threatened claims, damages,
liabilities, costs and expenses are due to the fraud, gross negligence or
willful misconduct of such Indemnified Person.
Section 9. Termination. This Management Agreement may be terminated by
-----------
the Management Company with 30 days prior written notice to each of the
Companies. Each Company shall have the right to terminate this Agreement with
respect to that Company with 30 days prior written notice to the Management
Company.
Section 10. Miscellaneous Provisions.
------------------------
(a) Assignment. This Agreement may be assigned by any of the parties
----------
hereto.
(b) Successors Bound. This Agreement shall be binding upon and inure to
----------------
the benefit of the parties hereto and their respective successors and assigns.
(c) Section Headings. The section headings in this Agreement are for
----------------
reference purposes only and shall not affect the interpretation of this
Agreement.
(d) Entire Agreement. This Agreement sets forth the entire understanding
----------------
of the parties and supersedes any and all prior agreements, memoranda,
arrangements and understandings, written or oral, relating to the subject matter
hereof. No representation, warranty, promise, inducement or statement of
intention has been made by any party which is not contained in this Agreement,
and no party shall be bound by, or be liable for, any alleged representation,
promise, inducement or statement of intention not contained herein.
(e) Counterparts. This Agreement may be executed in multiple counterparts,
------------
each of which shall be deemed an original, but all of which shall constitute the
same instrument.
(f) Governing Law. This Agreement shall be construed in accordance with
-------------
and governed by the internal laws, and not the law of conflicts, of the State of
Texas.
(g) Severability. If any provision of this Agreement or the application
------------
thereof to any person, entity or circumstance shall for any reason or to any
extent be invalid or unenforceable, the remainder of this Agreement and the
application of such provision to other persons, entities or circumstances shall
not be affected thereby, but, rather, shall be enforced to the extent consistent
with the intent of the parties hereto and permitted by law. Furthermore, in
lieu of such an illegal, invalid or unenforceable provision, there shall be
added automatically as part of
4
<PAGE>
this Agreement a provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid or enforceable.
(h) Notices. Any and all notices required under this Agreement may be
--------
delivered personally or by nationally recognized overnight courier service or
sent by mail or by telex or facsimile transmission, at the respective addresses
and transmission numbers set forth below and shall be effective when received.
The parties may change their respective addresses and transmission numbers by
written notice to the other parties, sent as provided herein. All
communications must be in writing and addressed as follows:
If to the Management Company:
TBC Management, Ltd.
13045 Research Blvd.
Austin, Texas 78750
Attention: Mark T. Walton
If to the Companies, to Travis Austin as representative of all of the
Companies:
Travis Boats & Motors, inc.
13045 Research Blvd.
Austin, Texas 78750
Attention: Mark T. Walton
(i) Amendments; Waivers. This Agreement cannot be changed or terminated
-------------------
orally and no waiver of compliance with any provision or condition hereof and no
consent provided for herein shall be effective unless evidenced by an instrument
in writing duly executed by the party hereto sought to be charged with such
waiver or consent. No waiver of any term or provision hereof shall be construed
as a further or continuing waiver of such term or provision or any other term
or provision.
5
<PAGE>
EXECUTED, to be effective as of the Effective Date.
"MANAGEMENT COMPANY":
TBC Management, Ltd.
Travis Boats & Motors, Inc.,
its General Partner
By:_________________________________
Name: Mark T. Walton
Its: President
"TRAVIS AUSTIN"
Travis Boats & Motors, Inc.
By:______________________________________
Name: Mark T. Walton
Its: President
"SUBSIDIARIES"
Falcon Marine, Inc.
By:______________________________________
Name: Mark T. Walton
Its: President
Falcon Marine Abilene, Inc.
By:______________________________________
Name: Mark T. Walton
Its: President
6
<PAGE>
TBC Arkansas, Inc.
By:______________________________________
Name: Mark T. Walton
Its: President
Travis Boats & Motors Baton Rouge, Inc.
By:______________________________________
Name: Mark T. Walton
Its: President
Travis Boating Center
Arlington, Inc.
By:______________________________________
Name: Mark T. Walton
Its: President
Travis Boating Center
Beaumont, Inc.
By:______________________________________
Name: Mark T. Walton
Its: President
Travis Boating Center
Louisiana, Inc.
By:______________________________________
Name: Mark T. Walton
Its: President
Travis Snowden Marine, Inc.
By:______________________________________
Name: Mark T. Walton
Its: President
7
<PAGE>
EXHIBIT 10.25
[Intentionally Left Blank]
<PAGE>
EXHIBIT 21.1
TRAVIS BOATS & MOTORS, INC.
SUBSIDIARY COMPANIES
<TABLE>
<CAPTION>
State of
Name Incorporation Assumed Name
---- ------------- ------------
<S> <C> <C>
Falcon Marine, Inc. Texas Travis Boating Center
Falcon Marine Abilene, Inc. Texas Travis Boating Center
Travis Boating Center Arlington, Inc. Texas Travis Boating Center
Travis Boating Center Beaumont, Inc. Texas Travis Boating Center
Travis Snowden Marine, Inc. Texas Travis Boating Center
TBC Management, Ltd. Texas
Red River Marine Arkansas, Inc. Arkansas
TBC Arkansas, Inc. Arkansas Travis Boating Center
Travis Boating Center Little Rock, Inc. Arkansas
TBC Management, Inc. Delaware
Travis Boats & Motors Baton Rouge, Inc. Louisiana Travis Boating Center
Travis Boating Center Louisiana, Inc. Louisiana Travis Boating Center
</TABLE>
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Selected
Consolidated Financial Data" and "Experts" and to the use of our report dated
November 8, 1995, in the Registration Statement (Form S-1) and related
Prospectus of Travis Boats & Motors, Inc. for the registration of 1,750,000
shares of its common stock.
ERNST & YOUNG LLP
Austin, Texas
May 3, 1996
<PAGE>
EXHIBIT 23.3
[LETTERHEAD OF TURNER, BURKETT & RING, P.A.]
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" and to the
use of our reports dated December 5, 1995, with respect to the financial
statements of Red River Marine, Inc. and its subsidiary included in the
Registration Statement (Form S-1) and related Prospectus of Travis Boats &
Motors, Inc. for the registration of 1,750,000 shares of its common stock.
/s/ Turner, Burkett & Ring, P.A.
Searcy, Arkansas
May 3, 1996
<PAGE>
EXHIBIT 23.4
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Selected
Consolidated Financial Data" and "Experts" and to the use of our report dated
May 17, 1994, in the Registration Statement (Form S-1) and related Prospectus
of Travis Boats & Motors, Inc. for the registration of 1,750,000 shares of its
common stock.
DEVONA JEFFERY LLC
/s/ Devona Jeffery
Austin, Texas
May 3, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AUDITED
FINANCIAL STATEMENTS FOR THE YEAR ENDED SEPTEMBER 30, 1995 AND THE UNAUDITED
FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED MARCH 31, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 9-MOS 6-MOS
<FISCAL-YEAR-END> SEP-30-1995 SEP-30-1996
<PERIOD-START> JAN-01-1995 OCT-01-1995
<PERIOD-END> SEP-30-1995 MAR-31-1996
<CASH> 996,058 664,969
<SECURITIES> 0 0
<RECEIVABLES> 1,046,717 4,455,289
<ALLOWANCES> 0 0
<INVENTORY> 14,270,312 28,733,265
<CURRENT-ASSETS> 16,477,021 34,061,458
<PP&E> 7,350,885 8,320,214
<DEPRECIATION> 1,559,693 1,761,154
<TOTAL-ASSETS> 23,356,663 41,897,813
<CURRENT-LIABILITIES> 13,669,056 31,445,930
<BONDS> 0 0
0 0
0 0
<COMMON> 26,835 26,835
<OTHER-SE> 4,785,027 5,027,982
<TOTAL-LIABILITY-AND-EQUITY> 23,356,663 41,897,813
<SALES> 41,442,349 22,016,532
<TOTAL-REVENUES> 41,442,349 22,016,532
<CGS> 31,136,555 16,445,167
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 6,569,809 4,564,242
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 670,020 668,547
<INCOME-PRETAX> 3,199,814 369,955
<INCOME-TAX> 1,149,621 127,000
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 2,050,193 242,955
<EPS-PRIMARY> .76 .09
<EPS-DILUTED> .76 .09
</TABLE>
<PAGE>
EXHIBIT 99(a)
December 13, 1995
To the Board of Directors
Travis Boats & Motors, Inc.
13045 Research Blvd.
Austin, Texas 78750
To Whom it May Concern:
I hereby consent to serve as a director of Travis Boats & Motors, Inc. upon
completion of its initial public offering which is expected to occur in February
1996. I further consent to have my name and biographical data submitted in
conjunction with the Company's filing of a Prospectus with potential investors
and the Securities and Exchange Commission.
Sincerely,
/s/ Steve Gurasich
<PAGE>
EXHIBIT 99(b)
December 13, 1995
To the Board of Directors
Travis Boats & Motors, Inc.
13045 Research Blvd.
Austin, Texas 78750
To Whom it May Concern:
I hereby consent to serve as a director of Travis Boats & Motors, Inc. upon
completion of its initial public offering which is expected to occur in February
1996. I further consent to have my name and biographical data submitted in
conjunction with the Company's filing of a Prospectus with potential investors
and the Securities and Exchange Commission.
Sincerely,
/s/ Zach McClendon, Jr.
